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A loan is a type of “self-help” aid that lets an individual borrow money from the government, banks or other lending institutions. Since it’s “self-help” aid, it must be paid back with added interest. Loans can be awarded based on financial need (subsidized loans) or not on financial need (unsubsidized loans). A student’s loan eligibility will be determined after his or her eligibility for grants, scholarships and Federal Work-Study program(s), has been considered.
There are student loans (which are generally long-term and have low interest), parent loans (for parents to help pay for college), alternative loans (from banks and lending institutions) and consolidation loans (which combine all eligible student loans for one easy payment with possible lower interest). Federal student loans generally have the lowest interest rates and the greatest flexibility. Alternative loans are used to supplement federal loans and are closely based on one’s credit history. Borrow conservatively, accepting only the amount of money needed. Loans can be a lot of help; but the more money borrowed, the more money that will have to paid back, with interest.
Loan Programs
Every student loan program - including those funded by the federal or state government, colleges, or other organizations - has its own unique awarding and processing cycle. If a student plans to use funds from a student loan to pay a balance owed the college, but those funds are not received prior to the scheduled due date(s), it is the student's responsibility to work with the appropriate office at the college to make satisfactory arrangements.
While some colleges may agree to temporarily postpone due dates (sometimes for a fee) until funds are received, others might require that the student make a full or partial payment by the established due date. If, once received, the student loan funds are more than the remaining balance due to the college, the student may receive the excess funds to reimburse out-of-pocket expenses or to apply toward other education-related costs. Students who are uncertain of the college's policy regarding anticipated financial assistance should contact their Financial Aid Office for clarification.
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