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Student Loans



Student loans assist students in financing their professional education. These loans are approved by the State Government.

The most important expenses considered for granting loans are:

»Fees payable to college or school

»Examination fees

»Library fees

»Laboratory fees

»Cost for housing, food and living

»Purchase of books and uniforms

»Travel expenses for studies abroad

»Purchase of computers (optional)


»Education Loan Application Form

2 passport size photographs

»Mark sheet of last examination

»Schedule of expenses for the specified course

»Bank statement

»Proof of income (if applicable)


Higher Education Contribution Scheme (HECS) is a well-known scheme for students in Australia. Through this scheme, students can easily pay their university fees. Their fees are government-subsidized.


In Canada, the federal government is responsible for the management of Student loans. Student loans in Canada are interest-free. However, after the recipient graduates, all loans shall carry an interest rate.

Though the rules regarding the territory of residence may vary, it is more or less related to where the candidate has been living for the past 12 consecutive months. An important thing to remember here is that the province of residence is concerned about where the candidate lived before he/she was a student.


In the Republic of Ireland, all student loans are interest-free. Banks like Bank of Ireland, Allied Irish Bank, National Irish Bank, and Ulster Bank, offer interest-free loans for other student expenses.


In New Zealand, part-time students can claim training fees only.

Once the student completes his graduation and starts working, he has to repay the amount of loan with surcharge. For those who leave the country, the repayment amount is assessed on their worldwide income.

In New Zealand, a large number of students are taking loans in favor of getting higher salaries. Local employers do not find it feasible to match with the international salaries.

From April 1, 2006, Student loans will be made interest-free for all New Zealand based graduates.


In Sweden, the National Board of Student Aid oversees the entire student loans. The National Board of Student Aid is a government agency in Sweden, which controls all matters with regard to student loans. In Sweden, it is known by the name of Centrala studiestödsnämnden (CSN).


In U.K., the Local Education Authority (LEA) sponsors all types of loans in England and Wales. The Local Education Authority is responsible for the management of all schools in the State. After assessing the application, the LEA verifies the eligibility of the student to borrow loan.

In U.K., the Student loans Company Ltd is an authorized body that grants all types of student loans. As soon as a student starts working, he can repay the amount of loan. The interest rates keep fluctuating and thus, loans are interest-free in real terms.

If the recipient does not clear the payment within 25 years after repayment begins, or when he turns 65 years old, the balance amount will be cancelled.


In the US, there are four types of student loans:

»Loans for Higher Education

»Federal Loans to Students

»Federal Student Loans to Parents

»Private Student Loans

Loans for Higher Education

These loans differ from each other in terms of scholarships and grants. For instance:

»Federal student loans are meant exclusively for students. The amount of loan will be limited, and can be repaid after the student completes his graduation and starts working.

»Parents can also claim for federal student loans. The amount of loan is considerably higher. Parents should be able to repay immediately.

»Private student loans are granted to either students or their parents. Since the amount of loan will be high, the student has to repay immediately after graduation.

Federal Loans to Students

As told earlier, these loans are offered to students directly. The amount of loan is limited. It can be used to fulfill personal needs, family needs, scholarships, work-study, etc. Occasionally, federal loans are either subsidized or unsubsidized by the US Government with the help of guaranty agencies. This depends upon the student’s financial capacity. All students are eligible to apply for these loans.

Subsidized loans are meant for those students who need finance badly. Students can also repay during the course of their study.

Federal Student Loans to Parents

These loans are also called PLUS loans. PLUS is an acronym for Parent Loans for

Undergraduate Students. The amount of loan is limited. They are required to make immediate loan payments. They are not provided with any grace periods.

Private Student Loans

Private financial institutions including banks, specialized education lenders, financial institutions, sponsor these loans. Students can enjoy the benefit of getting high limit on borrowings.

In addition, private student loans offer grace period of 6-12 months after graduation. The private education lenders usually offer a grace period of 6 months after graduation.

The overhead charges in private loans vary from one person to another.

A private student loan includes origination fee. It is a one-time fee, which is based on the amount of loan. Origination fees are generally from 3-9%.


Students, who borrow more loans, generally come from middle-income group and upper-income group families.

Other reasons for increase in student loans are:

»The education costs are increasing tremendously. Federal loans to students are not able to meet the rising costs.

»Students are borrowing more, as there is a wide gap between college prices and federal grant aid.

»Rise in educational costs have led to rise in financial needs of a borrower, which can be met by loans.

»Many loan programs offer higher loan amounts and ease of borrowing. This has led students to go for more loans.

Things get complicated for those students, who do not make repayments after graduation, and for professional students.

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