What are the Different Types of Loans for College?
A loan is a financial instrument that essentially allows a person or entity to acquire funds that they have not yet earned. When we borrow money, we are able to purchase items that are otherwise out of reach in our current financial state. For instance, individuals often borrow money to purchase real estate, educations, automobiles, or even vacations. Businesses borrow money to acquire expensive inventory, equipment, or to provide start-up funds to cover costs prior to full profitability.
The person or entity, usually a bank, who loans the money is essentially making an investment in the person or business in question. For their investment, they expect a profitable return. Their profit is exacted in the form of interest, which is a percentage of the loan that the borrower must pay on top of the principal loan amount.
Since paying cash for tuition is out of reach for most students, they frequently take student loans to finance the cost of education. This type of borrowing has its own set of rules and guidelines, yet these loans enable students to forge careers that might otherwise be out of reach.
Choose the Right Student Loan That Meets Your Needs