Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry lower interests than other loans and are usually issued by the government. Often they are supplemented by student grants which do not have to be repaid. A loan is a type of debt. ...

Australia

Main article: Tertiary education fees in Australia

In Australia, students can pay for university courses using the Higher Education Contribution Scheme (HECS). The selection criterion for HECS is based on the rank achieved in the secondary school final examination. HECS fees are government-subsidised and are substantially cheaper than full-fee paying places which have lower entry requirements.- Tertiary education fees in Australia are charged to all students but Australian citizens are able to obtain interest free loans from the government under the Higher Education Loan Programme (HELP) which replaced the Higher Education Contribution Scheme (HECS). ... The Higher Education Contribution Scheme, or HECS, is a tertiary education funding scheme introduced in 1989 by the Australian Commonwealth Government. ...

Courses are ranked into three bands, with a year's tuition costing around $4,000–$6,000 AUD. Students have the option of deferring the HECS fee until they start earning above a certain threshold, whereupon they will repay the government through the tax system; the amount owed is indexed to inflation. Alternatively, students can pay upfront at the beginning of the semester; this option provides a 25% discount (2004).

Recent legislative changes that allow a high proportion of full-fee paying places, and lower upfront payment discounts have been a source of controversy.

==Canada==requirement(toefl and GRE score)

Government loans

Canadian students are normally eligible for loans provided by the federal government, through the Canada Student Loans Program, in addition to loans provided by their province of residence. Loans issued to full-time students are interest free while a student is in full-time studies. Part-time students must make interest payments while in study and begin payments of principal and interest when they cease to be a part-time student. Grants may supplement loans to aid students who face particular barriers to accessing post-secondary education, such as students with permanent disabilities or students from low-income families. Canada is a constitutional monarchy and a Commonwealth Realm (see Monarchy in Canada) with a federal system of parliamentary government, and strong democratic traditions. ...

Students must apply for the Canadian and provincial loans through their province of residence. The rules for what determines your province of residence vary, but normally it is defined as where you have most recently lived for at least 12 consecutive months, not including any time you spent as a full-time student at a post-secondary institution. In most cases, the province of residence is the province one lived in before becoming a post-secondary student.

Canada Student Loans (CSL) of up to $210 per week of full-time study or 60% of the student's assessed need (the lesser of these) can be issued per loan year (August 1–July 31). Loans issued through provincial programs will normally provide students with enough funding to cover the balance of their assessed need. Part-time loans of up to $4,000 can be made, but a student cannot be more than $4,000 in debt on part-time loans at any one time. All Canadian students may also be eligible for the Canada Millennium Scholarship Foundation Bursary (CMS Grant), and other grants provided by their province of residence. The Canada Student Loans Program is a Human Resources and Skills Development Canada programme which promotes accessibility to Canadas post-secondary education institutes by allowing Canadians who demonstrate a financial need for access to student loans and grants. ... The Canada Millennium Scholarship provides students with opportunities to pursue the post-secondary education they need to prepare themselves for the future. ...

For example, students in British Columbia may be eligible for a maximum of $14,300 combined loan and grant funding per year. Motto: Splendor Sine Occasu (Latin: Splendour without diminishment) Official languages English Capital Victoria Largest city Vancouver Lieutenant-Governor Iona Campagnolo Premier Gordon Campbell (BC Liberal) Parliamentary representation  - House seats  - Senate seats 36 6 Area Total  - Land  - Water  (% of total)  Ranked 5th 944,735 km² 925,186 km² 19,549 km...

History

Some text from the Department of Human Resources and Social Development Canada:

The CSLP was created in 1964. Since its inception, the Program has supplemented the financial resources available to eligible students from other sources to assist in their pursuit of post-secondary education. Between 1964 and 1995, loans were provided by financial institutions to post-secondary students who were approved to receive financial assistance. The financial institutions also administered the loan repayment process. In return, the Government of Canada guaranteed each Canada Student Loan that was issued, by reimbursing the financial institution the full amount of loans that went into default.[1]

In 1995, several important changes were made to Canada Student Loans. First, the Canada Student Financial Assistance Act was proclaimed, replacing the existing Canada Student Loans Act (which still remains in force to this day) reflecting the changing needs of the parties involved in the loan process, including the conferred responsibility of the collection of defaulted loans to the banks themselves. The Government of Canada developed a formalized "risk-shared" agreement with several financial institutions, whereby the institution would assume responsibility for the possible risk of defaulted loans in return for a fixed payment from the Government which correlated with the amount of loans that were expected to be, or were, in default in each calendar year. During this period, the weekly federal loan amount was increased to a maximum of $165.-

On July 31, 2000, the risk-shared arrangement between the Government of Canada and participating financial institutions came to an end. The Government of Canada now directly finances all new loans issued on or after August 1, 2000. The administration of Canada Student Loans has become the responsibility of the National Student Loans Service Centre (NSLSC). There are two divisions of the NSLSC, one to manage loans for students attending public institutions and the other to administer loans for students attending private institutions. Defaulted Canada Student Loans disbursed under this new regime are now collected by the Canada Revenue Agency which, by Order in Council dated August 1, 2005, became responsible for the collection of all debts due under programs administered by Human Resources and Social Development Canada.

1995 (MCMXCV) was a common year starting on Sunday of the Gregorian calendar. ...

Students in professional programs

Most charter banks in Canada have specific programs for students in professional programs (e.g., medicine) that can provide more funds than usual in the form of a line of credit, sometimes with lower interest rates as well. Students may also be eligible for government loans that are interest free while in school on top of this line of credit, as private loans do not count against government loans/grants.-

Denmark

Student grants and student loans in Denmark are administered by the Danish State Educational Grant and Loan Scheme Agency, a Danish government agency. All students above age 18 are entitled to a free grant regulated partly by the income of their parents if they are below age 20. The basic rate for students living on their own and older than 20 is 4,724 DKK (about $810) a month. If needed, the student may supplement this with a student loan of 2,418 DKK (about $415) that has to be repaid when the student has completed his or her education. Thus a student will normally receive about 56,688 DKK (about $9,735) a year in grants with an optional 29,016 DKK (about $4,985) in loans, making a total of 85,704 DKK (about $14,720). High schools and universities are free for students, requiring no tuition or similar fees.

Germany

General

German universities are usually free for students (although many Federal States of Germany plan to introduce a student fee of about €1000 per year in 2007). Giving out student loans is seen as a means to pave the way to higher education for lower class children whose parents can't afford to fund their children's education otherwise. The federal law that regulates student loans is called "Bundesausbildungsförderungsgesetz" (Federal Education and Trainings Assistance Act) or "BAföG" for short, and student loans are usually referred to simply as "BAföG" by students (as in "I'm getting BAföG"). Eligible groups include high school students, part-time and full-time university students, second path education students (i.e., those starting to study after having been in the workforce), and students of schools for professional training. Germany is a Federal Republic made up of 16 States, known in German as Länder (singular Land). ... For other uses, see Euro (disambiguation) or EUR (disambiguation). ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the Anno Domini (common) era. ...

Eligibility dependent on parent income

The eligibility for BAföG loans is (usually) dependent from parent income, as parents are required by law to fund their children's education (including higher education), and therefore students could theoretically sue their parents for funds for their education (although this is rarely done for obvious reasons). For low-income families, BAföG loans take over when these obligations can not reasonably be met by parents.

BAföG-loans are usually given out half as zero interest loan (to be repaid only after the receiver exceeds a certain income level after graduation) and half as grant money to university students. High school students get the full amount as grant money if they are eligible. The current maximum amount per month (for a university student) is 521 Euros. This can be lowered gradually if student or parent income or student assets exceed certain amounts. Thus the amount paid out can be lower than the maximum amount and even loans of 1 Euro per month are given out if the calculation returns that amount. Such low grants seem nonsensical at first, but they are usually accepted by students (loans can be refused by the student), because eligibility for a BAföG loan (even of 1 Euro per month) makes the student eligible for some other benefits like cut-rate telephone service or waiving of public television licence fees (which otherwise are paid by everyone who owns a working TV set). A television licence (or more correctly broadcast receiver licence, as it usually also pays for public radio) is an official licence required in many countries for all owners of television (and sometimes also radio) receivers. ...

Generally, BAföG loans are independent from student achievement or grades at least for two years. After that, a certain minimum grade level has to be met and proof of participation in required, but ungraded courses, needs to be provided to stay eligible. Change of field of study is allowed once during the first two years without becoming ineligible. For university studies, every field of study has predefined a maximum study duration (usually around five years), after which the student becomes ineligible for BAföG. Further funds can be granted as low-interest loan for another two years if certain criteria (like reasonable likelihood that the student will graduate during that time) are met.

Eligibility independent from parent income

In some cases, like most notably if the student has worked full time for a number of years before returning to student status, BAföG eligibility is calculated independent from parent income, because parents' obligation to fund their children's education ends once the children enter the workforce full-time. In those cases, only student income and assets are consulted for BAföG eligibility and amount calculation.

Republic of Ireland

Although third-level tuition has been free in the Republic of Ireland since 1997, for other student expenses most of the major banks offer interest-free or cut-rate loans to students. There has been discussion on re-introducing fees, as recommended by the OECD, with deferred payment similar to the Australian system; i.e., a loan from the government repaid after graduation. The suggestion has however, been quite unpopular. Students attend a lecture at a tertiary institution. ... 1997 (MCMXCVII) was a common year starting on Wednesday of the Gregorian calendar. ... This is a list of banks throughout the world. ... The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ...

India

Loans for education are mostly available from nationalized banks. Also if you want to pursue higher studies abroad you can apply for loan at any bank at a high rate if you are a Middle class person.Also some charitable institution give loans at no interest rate.

New Zealand

The New Zealand state provided student loans and allowances are available to tertiary students who satisfy the funding criteria. Full-time students can claim loans for both fees and living costs while part-time students can only claim training institution fees. A non-refundable means-tested student allowance for living expenses can be claimed by students who are over 25 years old or whose parents have a low income. This criteria has caused anger among student bodies who point out that it excludes many self-sufficient adults from help due to parental income levels, and also that by age 25 most people have completed tertiary education. Education in New Zealand is nominally free for all primary, intermediate and secondary schooling. ...

Loans are repaid by a 10% tax surcharge on income, once the student graduates and is employed. There is a minimum income level, roughly equivalent to the unemployment welfare benefit payment rate, that is exempt from assessment. From 2001, all full-time students have been exempt from interest while studying, and from 2006 all borrowers resident in NZ have been exempted interest.

Loan recipients who leave New Zealand are assessed on their worldwide income for repayment purposes, with a minimum annual payment being required. Loan repayents are suspended on request for those on no /low income overseas, however interest still accumulates. From March 22nd 2007, the government is introducing a three year 'loan repayment holiday' for those overseas. In practice this is a uniform extension of the previous ability to waver repayments until a later date. As before interest accumulates during this period.

In recent years, large student loan debts have meant that a majority of graduates have sought higher paying overseas work instead of remaining in New Zealand. This has led to skill shortages ('brain drain') in some professions as local employers have been unwilling or unable to match international salaries. Medical-related professions have been particularly hard hit due to recent graduates, having high loan debts, and health employers, having tightly controlled government funding.

The loan system has changed and modified since its inception in 1992. Initially it provided bulk payments to students and charged lower then market interest rates from initial drawdown. This led some entrepreneurial students to use this money for investment purposes benefiting them but leading to a widespread perception of student excesses. In 2001 a growing debt mountain caused the new Labour government to stop interest payments while students studied and in 2006 they rode to election on the promise of stopping interest for all those remaining in New Zealand.

There is a lot of anger and frustration over the NZ loan system, especially from early generations of borrowers (1992-2001). These students consider themselves the 'guinea pigs' of the loan system, who were charged compounded interest from initial drawdown and then watched as future generations had interest removed completely. This generation suffered from a lack of education about the consequences of debt, and a lack of role-models to look to for advice. It is no coincidence that some of the hardest hit by previous versions of the loan system were from the poorer families the system was suppossed to 'enable'.

The student loan system has suceeded in turning New Zealand into a highly educated economy. However it has also led to a capitalist minded workforce who frequently leave their home country in order to pursue the better career and loan repayment options available overseas.

Norway

In Norway, student loans are issued by Statens lånekasse for utdanning (The Norwegian State Educational Loan Fund), commonly referred to as Lånekassen. Loans are issued to students following studies at Norwegian universities and colleges, as well as studies abroad which have been approved by Lånekassen. No interest is paid until graduation. Every semester, providing that the student has passed all exams, part of the loan is converted into a grant. The Norwegian State Educational Loan Fund (Statens lÃ¥nekasse for utdanning) provides loans and grants to Norwegian and certain foreign students for their education. ...

Sweden

Student grants and student loans in Sweden are administered by the Swedish National Board of Student Aid, a Swedish government agency. Students living with their parents often only take the student grant, while other students tend to take both the student grant and the student loan. A full-time student gets SEK 2,492 (about $370) a month in student grant money, and can borrow up to SEK 4,764 (about $700) a month, which equals a total of SEK 7,259 (about $1,070). During the summer months, the student gets no grants or loans unless taking a summer course. Thus a full-time student gets SEK 24,920 (about $3,700) a year in student grants, and can borrow up to SEK 47,640 (about $7,000) a year, which gives a total of SEK 72,590 (about $10,700). No income tax is paid on student grants and student loans. In Sweden, university studies are free of charge. The National Board of Student Aid, or Centrala studiestödsnämnden (CSN) is a Swedish government agency. ... The Government agencies in Sweden are state controlled organizations who act independently to carry out the policies of the Swedish Government. ...

United Kingdom

British undergraduate and PGCE students can apply for a loan through their local education authority (LEA) in England and Wales, the Student Awards Agency for Scotland (SAAS), or their local education and library board in Northern Ireland. The LEA, SAAS, or education and library board then assesses the application and determines the amount that the student is eligible to borrow, as well as how much tuition fees, if any, the students' parents must pay. The family's income; whether the student will be living at home, away from home, or in London; disabilities; and other factors are taken into account. 75% of the full loan (around £3,000) is available to all students in England and Wales, with only the final 25% being means-tested (taking the total available up to as much as £4,000). There is also extra money (currently roughly another £1,000) if you go to university in London, where it is deemed the extra cost of living necessitates a higher loan. Scotland has a slightly different assessment method where more of the loan is means-tested with a minimum loan of only £840. However much you get, it is paid in three installments during each year of the student's course (one per term). Special rules apply for some courses and for part-time courses. In some educational systems, undergraduate education is post-secondary education up to the level of a Bachelors degree. ... The Postgraduate Certificate in Education (PGCE) is a one-year course in the UK for existing bachelors degree holders leading to Qualified Teacher Status (QTS), which is needed to become a teacher in maintained (state or local authority) schools. ... A Local Education Authority (LEA) is the part of a council in England or Wales that is responsible for education within that councils jurisdiction. ... Motto: (French for God and my right) Anthem: God Save the King/Queen Capital London (de facto) Largest city London Official language(s) English (de facto) Unification    - by Athelstan AD 927  Area    - Total 130,395 km² (1st in UK)   50,346 sq mi  Population    - 2006 est. ... This article is about the country. ... The Student Awards Agency for Scotland (SAAS) is an Executive Agency of the Scottish Executive Enterprise, Transport and Lifelong Learning Department and is responsible for paying the tuition fees for Scottish higher education students and awarding student loans. ... Anthem: UK: God Save the Queen Regional: (de facto) Londonderry Air Capital Belfast Largest city Belfast Official languages English (de facto), Irish, Ulster Scots 3, BSL, NISL, ISL Government Constitutional monarchy  - Queen Queen Elizabeth II  - Prime Minister of the UK Tony Blair MP  - First Minister Ian Paisley  - Deputy First Minister... This article is about the capital of England and the United Kingdom. ...

Loans are provided by the Student Loans Company and do not have to be repaid until students have completed their course and are earning £15,000 a year (£10,000 until April 2005). The interest rate is updated annually and is tied to inflation (currently 2.6%), making the loan interest-free in real terms. The loan is normally repaid using the PAYE system, with 9% of the graduate's gross salary over £15,000 automatically being deducted to pay back the loan. There is no particular schedule for clearing the debt, but, if it has not been cleared 25 years after repayment began, or the student turns 65 years old, the remaining debt will be cancelled. For students beginning courses before 1998, the arrangements for repaying and deferring are different. Although Scottish students have their tuition fees covered by the SAAS during their time of study, much of this is actually repaid in a Graduate Endowment. The Student Loans Company Limited is a non-departmental public body in the United Kingdom responsible for the provision of financial support to students attending university. ... 2005 (MMV) was a common year starting on Saturday of the Gregorian calendar. ... PAYE (or pay-as-you-earn) is a payroll deduction system for collecting income tax in the United Kingdom. ... Look up gross, groß in Wiktionary, the free dictionary. ...

The Higher Education Act 2004 will make significant changes to the loans system in England, Wales and Northern Ireland from 2006. Upfront tuition fees will be abolished, with the fee being added to students' loans for them to pay back after their course is finished. However, instead of the tuition fee being fixed at around £1,150 for all universities (which, due to means-testing, not all have to pay), universities will be able to charge variable fees of up to £3,000. For students who have already started their courses and, as such, are still paying the upfront fees, can now add these fees to their loans if they want. Critics claim these top-up fees will create tiers of "expensive" and "cheap" universities and make university financially inaccessible to many students. As a result, there have been national demonstrations and protests by students' unions. The Higher Education Act 2004 is an Act of the Parliament of the United Kingdom which introduced several changes to the higher education system in the United Kingdom. ... Motto: (French for God and my right) Anthem: God Save the King/Queen Capital London (de facto) Largest city London Official language(s) English (de facto) Unification    - by Athelstan AD 927  Area    - Total 130,395 km² (1st in UK)   50,346 sq mi  Population    - 2006 est. ... This article is about the country. ... Anthem: UK: God Save the Queen Regional: (de facto) Londonderry Air Capital Belfast Largest city Belfast Official languages English (de facto), Irish, Ulster Scots 3, BSL, NISL, ISL Government Constitutional monarchy  - Queen Queen Elizabeth II  - Prime Minister of the UK Tony Blair MP  - First Minister Ian Paisley  - Deputy First Minister... Top-up fees (not their official name) are a new way of charging tuition to undergraduate and PGCE students who study at universities in the United Kingdom from the 2006-2007 academic year onwards. ... A students union, student government, student leadership,or student council is a student organization present in many elementary schools, middle schools, high schools, colleges and universities. ...

United States

Loans for higher education

While included in the term "financial aid" higher education loans differ from scholarships and grants in that they must be paid back. They come in several varieties in the United States: Financial aid refers to funding intended to help students pay tuition or other costs, such as room and board, for education at a college, university, or private school. ... Scholarship is the pursuit of academic research, whether in the arts and humanities or sciences, and in all such fields means deep mastery of a subject, often through study at institutions of higher education. ... Grants are funds given to tax-exempt nonprofit organizations or local governments by foundations, corporations, governments, small business and individuals. ...

• Federal student loans made to students directly: No payments while enrolled in at least half time status. If a student drops below half time status, the account will go into its 6 month grace period. If the student re-enrolls in at least half time status, the loans will be deferred, but when they drop below half time again they will no longer have their grace period. Amounts are quite limited as well.
• Federal student loans made to parents: Much higher limit, but payments start immediately
• Private student loans made to students or parents: Higher limits and no payments until after graduation, although interest will start to accrue immediately. Private loans may be used for any education related expenses such as tuition, room and board, books, computers, and past due balances. Private loans can also be used to supplement federal student loans, when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of higher education.

Federal loans to students

See Federal Perkins Loan, Stafford loan, Federal Family Education Loans, Ford Direct Student Loans, and Federal student loan consolidation A Federal Perkins Loan, or Perkins Loan, is a need-based student loan offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. ... A Stafford Loan is a student loan offered to students enrolled in American institutions of higher education to help finance their education. ... The Federal Family Education Loan Program (FFELP) is a United States Department of Education program that provides for private organizations to market, originate, and service federally guaranteed loans, such as Stafford and PLUS loans to students and their parents. ... The William D. Ford Federal Direct Loan Program is a United States Department of Education program that markets, originates, and disburses loans for higher education (including Stafford, Perkins, and PLUS loans). ... In the United States both the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP) include consolidation loans that allow students to consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single debt. ...

Federal student loans in the United States are authorized under Title IV of the Higher Education Act as amended.

The first type are loans made directly to the student. These loans are available to college and university students and are used to supplement personal and family resources, scholarships, grants, and work-study. They may be subsidized by the U.S. Government or may be unsubsidized depending on the student's financial need. ...

Both subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guarantee agencies. Nearly all students are eligible to receive them (regardless of credit score or other financial issues). Both types offer a grace period of six months, which means that no payments are due until six months after graduation or three months after the borrower becomes a less-than-full-time student without graduating. Both types have a fairly modest annual limit. The limit in January 2007 is $2,625 per year for freshman undergraduate students, $3,500 for sophomore undergraduates, and $5,500 per year for junior and senior undergraduate students. The United States Department of Education was created in 1979 (by PL 96-88) as a Cabinet-level department of the United States government, and began operating in 1980. ... In law, a grace period is a period of time during which a particular rule exceptionally does not apply, or only partially applies. ...

Subsidized federal student loans are offered to students with a demonstrated financial need: generally requiring a low family income. For these loans, the federal government makes interest payments while the student is in college. For example, those who borrow $10,000 during college will owe $10,000 upon graduation.

Unsubsidized federal student loans are also guaranteed by the U.S. Government, but the government does not pay interest for the student, rather the interest accrues during college. Those who borrow $10,000 during college will owe $10,000 plus interest upon graduation. For example, those who have borrowed $10,000 and had $2,000 accrue in interest will owe $12,000. Interest will begin accruing on the $12,000. The accrued interest will be "capitalized" into the loan amount, and the borrower will begin making payments on the accumulated total. Students can choose to pay the interest while still in college. ...

Federal student loans for students of medicine have higher limits: $8,500 for subsidized Stafford and $30,000 maximum for unsubsidized Stafford. Many students also take advantage of the unsubsidized Perkins Loan. For graduate students the limit for Perkins is $6,000 per year.

Federal student loans to parents

See PLUS loan PLUS (Parent Loan for Undergraduate Students) Loans are loans offered to parents of students enrolled full-time at American institutions of higher education. ...

Usually these are PLUS loans (formerly standing for "Parent Loan for Undergraduate Students"). Unlike loans made to students, parents can borrow much more — usually enough to cover any gap in the cost of education. However, there is no grace period: Payments start immediately.

Parents should be aware that THEY are responsible for repayment on these loans, not the student. This is not a 'cosigner' loan with the student having equal accountability. The parents have signed the master promissory note to pay and, if they do not do so, it is their credit rating that suffers. Also, parents are advised to consider "year 4" payments, rather than "year 1" payments. What sounds like a "manageable" debt load of $200 a month in freshman year can mushroom to a much more daunting $800 a month by the time four years have been funded through loans. The combination of immediate repayment and the ability to borrow substantial sums can be expensive. The act of cosigning is to agree to pay another persons debts if they fail to do so. ...

Under new legislation, graduate students are eligible to receive PLUS loans in their own names for studies. These Graduate PLUS loans have the same interest rates and terms of Parent PLUS loans.

Parents should also be aware that legislation raised the interest rate on these loans significantly — to 8.5% on July 1, 2006.

Private student loans

These are loans that are not guaranteed by a government agency and are made to students by banks or finance companies. Advocates of private student loans suggest that they combine the best elements of the different government loans into one: They generally offer higher loan limits than direct-to-student federal loans, ensuring the student is not left with a budget gap. But unlike to-the-parent government loans, they generally offer a grace period with no payments due until after graduation. This grace period ranges as high as 12 months after graduation, though most private lenders offer six months.

Rates and interest Private student loan rates are lower than non-specialized private loans (e.g., "signature" loans) but slightly higher than government loan rates. That may be changing, as pending legislation would raise government student loan rates to similar rates as private student loans.

Most private loan programs are tied to one or more financial indexes, such as the Wall Street Journal Prime rate or the BBA LIBOR rate, plus an overhead charge. Because private loans are based on the credit history of the applicant, the overhead charge will vary. Students and families with excellent credit will generally receive lower rates and smaller loan origination fees than those with less than perfect credit. Money paid toward interest is now tax deductible. The Wall Street Journal is an influential international daily newspaper published in New York City, New York with an average daily circulation of 1,800,607 (2002). ... Historically, in North American banking, the prime rate was the interest rate charged by lenders to borrowers who they considered most creditworthy, although this is no longer the case. ... The British Bankers Association (BBA) is a trade association, which represents banks and other financial services firms, either British or foreign owned, that operate in the United Kingdom. ... LIBOR stands for the London Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale (or interbank) money market. ...

Fees

Private loans often carry an origination fee. Origination fees are a one-time charge based on the amount of the loan. They can be taken out of the total loan amount or added on top of the total loan amount, often at the borrower's preference. Some lenders offer low-interest, 0-fee loans, but these are usually available only to those with high credit scores (800 or more). Each percentage point on the front-end fee gets paid once, while each percentage point on the interest rate is calculated and paid throughout the life of the loan. Some have suggested that this makes the interest rate more critical than the origination fee. An origination fee is a fee or charge for establishing a new loan. ...

In fact, there is any easy solution to the fee-vs.-rate question: All lenders are legally required to provide you a statement of the "APR (Annual Percentage Rate)" for the loan before you sign a promissory note and commit to it. Unlike the "base" rate, this rate includes any fees charged and can be thought of as the "effective" interest rate including actual interest, fees, etc. When comparing loans, it may be easier to compare APR rather than "rate" to ensure an apples-to-apples comparison. APR is the best yardstick to compare loans that have the same repayment term; however, if the repayment terms are different, APR becomes a less-perfect comparison tool. With different term loans, consumers often look to 'total financing costs' to understand their financing options.

Eligibility

Private student loan programs generally issue loans based on the credit history of the applicant and any applicable cosigner/co-endorser/coborrower. This is in contrast to federal loan programs that deal primarily with need-based criteria, as defined by the EFC and the FAFSA. For many students, this is a great advantage to private loan programs, as their families may have too much income or too many assets to qualify for federal aid but insufficient assets and income to pay for school without assistance. FAFSA, the Free Application for Federal Student Aid, is a form that must be filled out annually by college students and their parents in the United States to determine their eligibility for federal financial aid (including grants, loans, and work-study programs). ...

Additionally, many international students in the United States can obtain private loans (they are ineligible for federal loans in many cases) with a cosigner who is a United States citizen or permanent resident.

The terms for alternative loans vary from lender to lender. A common suggestion is to shop around on ALL terms, not just respond to "rates as low as..." tactics that are sometimes little more than bait-and-switch. Examples of other borrower terms and benefits that vary by lender are deferments (amount of time after leaving school before payments start) and forebearences (a period when payments are temporarily stopped due to financial or other hardship). These policies are solely based on the contract between lender and borrower and not set by Department of Education policies.

Federally subsidized consolidations are not available for alternative student loans, though several lenders offer private consolidation programs. Borrowers of privately subsidized student loans may face the same restrictions to bankruptcy discharge as for government based loans: New legislation makes clear that these loans are, like federal student loans, not dischargeable under bankruptcy. Even before the legislation was passed, however, private student loans that were guaranteed 'in whole or in part' by a nonprofit entity are non-dischargeable in bankruptcy (and most private loans, regardless of the lender, were indeed guaranteed by a nonprofit).

Types

Private loans generally come in two types: school-channel and direct-to-consumer.

School-channel loans offer borrowers lower interest rates but generally take longer to process. School-channel loans are 'certified' by the school, which means the school signs off on the borrowing amount, and the funds for school-channel loans are disbursed directly to the school.

Direct-to-consumer private loans are not certified by the school; schools don't interact with a direct-to-consumer private loan at all. The student simply supplies enrollment verification to the lender, and the loan proceeds are disbursed directly to the student. While direct-to-consumer loans generally carry higher interest rates than school-channel loans, they do allow families to get access to funds very quickly — in some cases, in a matter of days. Some argue that this convenience is offset by the risk of student over-borrowing and/or use of funds for inappropriate purposes, since there is no third-party certification that the amount of the loan is appropriate for the education finance needs of the student in question.

Direct-to-consumer private loans are the fastest growing segment of education finance and, as such, a number of providers are introducing products. Loan providers range from large education finance companies to specialty companies that focus exclusively on this niche. Such loans will often be distinguished by the indication that "no FAFSA is required" or "Funds disbursed directly to you."

Discharge

US Federal student loans and some private student loans can be discharged in bankruptcy only with a showing of "undue hardship." Bankruptcy Code Section 523(a)(8) determines what loans can and can not be discharged. The undue hardship standard varies from jurisdiction to jurisdiction, but is generally difficult to meet, making student loans practically non-dischargeable through bankruptcy. While US Federal student loans can be discharged for total and permanent disability, private student loans cannot be discharged outside of bankruptcy.

Disbursement: How the money gets to student or school

There are two distribution channels for federal student loans. The channels are identified by their names: Federal Direct Student Loans and Federal Family Education Loans. Federal Direct Student Loans, also known as Direct Loans or FDLP loans, are funded from public capital originating with the U.S. Treasury. FDLP loans are distributed through a channel that begins with the U.S. Treasury Department and from there passes through the U.S. Department of Education, then to the college or university and then to the student. Federal Family Education Loan Program loans, also known as FFEL loans or FFELP loans, are funded with private capital provided by banking institutions (i.e., banks, savings and loans, and credit unions). Because the FFELP loans use private capital as their source, students who use FFELP loans are able to take advantage of payment options that are similar to those available to customers who take out a home loan or a consumer loan. For example, some institutions will allow a discount for automatic payments or a series of on-time payments. In 2005, approximately two-thirds of all federally subsidized student loans were FFELP. The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ... Banker redirects here; see wiktionary:banker for more meanings. ... A savings and loan association is a financial institution which specializes in accepting savings deposits and making mortgage loans. ... A credit union is a not-for-profit co-operative financial institution that is owned and controlled by its members, through the election of a volunteer Board of Directors elected from the membership itself. ...

According to the U.S. Department of Education, more than 6,000 colleges, universities, and technical schools participate in FFELP, which represents about 80% of all schools. FFELP lending represents 75% of all federal student loan volume.

The maximum amount that any student can borrow is adjusted from time to time as federal policies change. A study published in the winter 1996 edition of the Journal of Student Financial Aid, “How Much Student Loan Debt Is Too Much?” suggested that the monthly student debt payment for the average undergraduate should not exceed 8% of total monthly income after graduation. Some financial aid advisers have referred to the 8% level as “the 8% rule.” Circumstances vary for individuals, so the 8% level is an indicator, not a rule set in stone. A research report about the 8% level is available on the internet at [2] Follow links to --> Reports and presentations --> How Much Student Loan Debt Is Too Much?

Problems

In 1997, under intense lobbying from student loan companies, The Higher Education Act (HEA) was amended, and defaulted student loans became among the most lucrative and easiest to collect type of debt. These amendments allow for huge penalties and fees to be attached to defaulted student loan debt, take away bankruptcy protection for student borrowers, disallow refinancing of the debt, and also provide for draconian collection and punitive measures to be taken against student borrowers, including wage garnishment, tax garnishment, withholding of professional certifications, termination from employment, Social Security garnishment, and others. According to Harvard professor Elizabeth Warren in a Wall Street Journal^[1] piece by John Hechinger, "Student-loan debt collectors have power that would make a mobster envious."

Student Loan Providers

• American Student Loan Services
• Sallie Mae

SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, (formerly named the Student Loan Marketing Association) is the largest provider of educational loans in the United States. ...

References

1. ^ http://online.wsj.com/public/us

See also

United States

• Higher Education Loan Authority of the State of Missouri

The Higher Education Loan Authority of the State of Missouri, aka the Missouri Higher Education Loan Authority, or MOHELA, is one of the largest holders and servicers of student loans nationwide. ...

External links

Canada

• Canadian Federal Student Loan Program

Germany

• German Student Loans Program Information - BAfoeG

India

• StudentIndia.com
• [3]

New Zealand

• Inland Revenue Student Loan Information

United Kingdom

• Directgov student finance section
• Confused Student
• Bafoeg for foreign Students, German
• Student finance guide
• UK University guides
• Loans UK

United States

• U.S. Dept. of Education, source of the FAFSA form
• American Student Loan Services
• Sallie Mae
• Student Loan Information