A student loan is a loan given specifically for the purpose of covering college costs. These loans can be complete, in which case they cover the entire cost of the education or partial, in which case they only bridge the gap between what the student can afford and the actual cost of the education. Student loans are both federal and private in nature and usually come at a lower rate of interest than other types of loans.
Since these loans do not take into consideration the academic excellence of the student, they are available to a much larger group. The question now is if anyone can take these loans or are they restrictions placed on who all can apply for the loan.
Here is some information on student loans:
- Citizenship – Student loans are almost always made available only to the citizens of the country. So these loans are offered to those students or parents who are citizens. There are a few exceptions here but these are extremely rare.
- Credit rating/score – Another important aspect that is considered in obtaining a student loans is the credit rating of the person seeking the loan. If the parent seeking the loan suffers from a poor credit rating then there is little chance that the loan will be approved. Similarly, if the student has a track record of not completing courses before and has a poor credit rating, then the loan maybe denied to the student as well. Since a student loan is at the end of the day a loan, the ability to pay back the loan and also the credit rating of the person, both are taken into consideration.
- Purpose – A very important aspect of the student loan is that it can only be taken for the purpose of study. This is the reason why most federal student loans are given out directly to the educational institution as opposed to handing out the money to the student. You cannot take a student loan and then not pursue the committed course and instead use the money for some other purpose. That would be fraud. So only those who do seek a college or university education can apply for these loans.
Basically, almost anyone can apply for a student loan, and if the credit scores are good, they will be given the loan. The popularity of student loans rests on this fact that they are made available to almost anyone who wants to study as opposed to scholarships and grants that have restrictions, and have a much smaller area of participation. The purpose of these student loans is to financially help students, who otherwise would not be able to afford college, pursue higher education.