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Student Loans

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

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.

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.

Financial Aid

Student financial aid refers to funding intended to help students pay educational expenses. This includes tuition and fees, room and board, books and supplies, and so on for education at a college, university, or private school. The federal government provides need-based federal aid called Federal Student Financial Aid, which is composed of different programs, grants, and scholarships, work and loan programs.

To qualify for federal student aid, a student must file the Free Application for Federal Student Aid (FAFSA). This FAFSA uses a calculation taking into consideration,income and assets, to determine a student's Expected Family Contribution (EFC). Colleges use the this information to decide what types of financial aid a student is eligible to receive. Students must complete the FAFSA each year to be considered for financial aid.

General governmental funding for public education is not called financial aid, which refers to awards to specific individual students. A scholarship is sometimes used as a synonym for a financial aid award, although grants and student loans are also components of financial aid packages from students' intended colleges.Institutions may also offer their own student financial assistance, in the form of need- or merit-based aid, as well as endowed scholarships. Some schools may only require the FAFSA.

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