Student loan is a legal document that allows you to borrow money from the U.S. Department of Education that is backed by the federal government using your future earnings as collateral.
Benefits of Student loan
1. The interest rate on student loan is almost zero. If you can pay your loan back when you have an income then this is definitely a great option.
2. Any money that you borrow for education (like school, college or training) is tax deferred meaning that you don’t have to pay taxes on it until you start earning above a certain amount of money each year.
3. Student loan enables students to continue their education at a college or university after high school graduation. Students can attend expensive private schools or universities as well as community colleges at low cost (or sometimes even free) by taking out student loans!
4. With a student loan you can also attend trade schools and training programs that will help you get a better job to support yourself in the future.
5. With student loan you can pursue graduate school including law or medical school.
6. The Federal government offers student loans with an interest rate of 3.4% for undergraduate, 6% for graduate, and 5% for PLUS loans (for parents). Loan amounts are usually up to $20,000 per year although the amount that you can borrow will vary depending on your income and savings as well as the cost of the school or school district that you live in.
7. The Federal government offers student loans with an interest rate of 5% for Perkins Loan (for students with exceptional financial need). Loan amounts are usually up to $5,000 per year although the amount that you can borrow will vary depending on your income and savings as well as the cost of the school or school district that you live in.
8. Certain types of federal student loans offer loan forgiveness and cancellation such as public service loan forgiveness and military service cancellation which could allow you to have your student loan completely canceled after specific conditions are met after a certain period of time.