Types of student loans
There are several types of student loans that you can consider when financing your education. These include:
1. Federal student loans
These are loans provided by the federal government to help students pay for their education. They come with fixed interest rates and various repayment options, including income-driven repayment plans.
2. Private student loans
These are loans provided by banks, credit unions, and other private lenders to help students pay for their education. They often have variable interest rates and may require a co-signer. Private student loans may have fewer repayment options and may not offer the same protections as federal student loans.
Federal vs. private student loans
Federal student loans are loans provided by the U.S. government to help students pay for their education. These loans are made through the William D. Ford Federal Direct Loan (Direct Loan) Program and are available to students regardless of their credit history. Federal student loans have fixed interest rates and offer several repayment options, including income-driven repayment plans and forgiveness programs.
On the other hand, private student loans are provided by banks, credit unions, and other private lenders. These loans are based on the borrower’s credit history and financial situation and may have variable interest rates. Private student loans may not offer the same repayment options as federal student loans and may not be eligible for forgiveness programs.
It is generally recommended that students exhaust their federal student loan options before considering private student loans, as federal loans tend to have more favourable terms and conditions. However, in some cases, private student loans may be necessary for students who have exhausted their federal loan options and still need additional funding for their education.
Best Student Loan Providers in 2023
Following is the list of best student loan providers in 2023:
1. GyanDhan
GyanDhan is India’s first education financing marketplace, aiming to equalise and expand access to education. They offer complete education loan assistance in a purely digital format. They have partnered with prominent student loan providers in India and abroad to provide student loan solutions from the convenience of one’s own home. An intriguing feature is that the bids of the lenders determine the interest rate, and you can repay the loan without penalty in most scenarios.
2. Auxilo
Auxilo is a pro-education NBFC in India that is registered with the Reserve Bank of India. They provide convenient door-to-door services as well as a digitally integrated platform. The platform provides competitive interest rates as well as flexible repayment terms. They provide tailored student loan solutions for a wide range of courses and locations.
3. College Ave
College Ave Student Loans is a private student loan lender based in Newark, Delaware. The company was founded in 2014 with the goal of providing a simpler and more personalised experience for students and their families seeking education financing. College Ave offers a range of student loan products, including undergraduate, graduate, and parent loans, as well as refinancing options for existing student loan borrowers. The company provides a high level of customer service and offers flexible repayment options to meet the needs of its borrowers goals.
4. MPOWER Financing
MPOWER Financing is a global education finance company that provides loans to students and professionals around the world. The company studwas founded in 2014 and is headquartered in Washington, D.C. MPOWER Financing offers a variety of loan options to students and professionals, including undergraduate and graduate loans, career advancement loans, and loan refinancing. The company works with a network of partners, including universities, employers, and governments, to provide customised financing solutions for students and professionals in over 150 countries.
How to choose a student loan provider
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The following are the factors to consider before choosing a student loan provider:
1. What are the Interest rates?
This is among the most critical factors to consider when selecting a student loan provider. There are two types of interest rates available on student loans: fixed-rate (where the interest rate is predetermined and remains the same throughout the loan term) and variable rate (interest rates may change based on the flux of the market).
Variable rates have lower interest rates than fixed rates, but they could change drastically if the economy starts to falter. So, before opting for a variable-rate student loan, conduct thorough research. The amount of money apart from the principal you’ll likely shed out depends hugely on the interest rate, so explore your options properly.
2. What is the Disbursement Period?
A university admissions deadline is likely to be on time. You must have your funds available if you wish to deposit your fees on schedule. It is always better to be prepared sooner rather than later.
Explore what previous borrowers have to say about the application processing time when registering with a student loan provider. If your preferred student loan provider takes months to process the applications and then another few months to deliver the loan to your bank account, you should consider other alternatives.
3. What is the Repayment duration?
If you take out a loan, you must repay it, but how fast and how much you repay every month can have serious consequences for your future. Most student loan providers allow a flexible repayment schedule.
A short repayment schedule shows that you will return your debt in less time. In practice, a short-term loan will have lower interest rates than a longer-term loan. Nevertheless, because you’re paying fewer payments on a short-term loan, your monthly instalments would be increased. Select a duration that permits you to pay the Instalments comfortably. You can always pay off your student loan early if you have extra money.