Student Loans

Who don't like a little help, when they are really in need. That might be a small help for one person but for the receiver it would mean the world. It's the same in case of the Student Loans. Even if a student does not have financial support to pursue a degree, they can receive monetary help from various student loan providers to achieve their dream degree.

Posted by Arusha Gupta on 20th February 2018

Student Loans

Every student dreams of getting into a good college and starting a career on a good note.

We are all familiar with the fact that throughout the years, the students around the world have been scammed with a promise/guarantee of "100% job placement" a job after their graduation or within their course of study, by their college.

And for obvious reasons, we would want to get an admission in one of these colleges, "why would you dislike having a job right?"

But getting into colleges is a tough process, clearing the entrance exams and admission process and not to forget the huge course fee.

The private colleges have been charging us crazy in the name of placements and quality education. But unfortunately, some of us can’t afford to get into one of these colleges because of the fee structure.

Because of this major issue, many schemes and alternative ways have come up which is helping students to pay fees. The idea of “Student loan” has a huge impact on the United States.

What is a Student Loan?

  • A student loan is a type of loan which helps students to pay for higher studies and its associated fee structure, which includes tuition, books, and living expenses.

  • The interest rate on student loans is comparatively lower than the other loans.

  • The repayment schedule can be postponed while the student is in school or college.

  • It also differs in many countries in the strict laws regulating prolongation and bankruptcy.

  • Around 43 million students in the US have student loans, with an average balance of $33,000.

  • Loans need to be repaid unlike financial aids, which never have to be repaid.

Federal Loans

You can take federal loans from the government to pay for your education. They include two types of loans:

Direct loans— funded directly by the US Department of Education 

Guaranteed loans—originated and funded by private investors, but which have been guaranteed by the federal government.  

Federal loans are available to the college students via the funds that are directly given to the college.  They are used to aid personal and family resources, scholarships, grants, and work-study.

  • The funds that you get from these loans should be used for educational purpose only which includes tuition, fees, books & supplies, equipment, transportation and rental or purchase of a computer.

  • The loans that are provided by the government are Stafford Loans and Federal Perkins Loans.

  • Almost all the students can receive federal loans. Undergraduates typically receive lower interest rates, but graduate students typically can borrow more.

  • Federal loans have a higher limit: $8,500 for subsidized Stafford and $12,500 for unsubsidized Stafford. You can also use Federal Perkins Loan. For graduate students, the limit for Perkins is $6,000 per year.

How do students get the money?

FDLP (Federal Direct Student Loans) are distributed in a network where it begins from U.S. Treasury Department and then passes through the United States Department of Education, then to the college or university and then to the student. It is a long chain of networks.

What is the maximum amount of loan that a student can take?

You can apply for the whole cost of education, except for other aid. In order to know the maximum amount of loan, you will need to contact financial aid office. After you apply and receive credit approval for you and your co-signer, your college must certify the amount of the loan.

If the education funding plan is used responsibly, the student loans can help to put US education within reach, ignoring how your financial circumstances are.

Repayment of loans

When the loans enter the stage of repayment, they automatically get signed up for Standard Repayment.  According to this, the student has 10 years to repay the total amount of his loan.  The loan servicer will calculate the monthly bill which will help to pay off the original loan and the interest (12 payments a year).

Repayment Plans

  • Pay as you earn(PAYE)

  • Income-based repayment(IBR)

  • Revised pay as you earn(REPYEE)

  • Income –Contingent Repayment(ICR)

It might be difficult to get an admission in college with high standards but it’s not impossible. Because of the plans and financial aid from US government, you can successfully complete the course that you always desired off.


This article tells you about what is student loan and why is it important for a student in his/her life. Student loans are helpful for a person to help them in their educational expense and aid them in their degree.


  1) What is the maximum amount of student loan that you can get?



Dependent Undergraduate Student

Dependent Undergraduate Student with a Parent PLUS Loan denial

Independent Undergraduate Student

Graduate and Professional Degree Student


(0 – 29 credits)


A maximum of $3,500 may be subsidized


A maximum of $3,500 may be subsidized


A maximum of $3,500 may be subsidized



(29.1 – 59 credits)


A maximum of $4,500 may be subsidized


A maximum of $4,500 may be subsidized


A maximum of $4,500 may be subsidized


Third-, Fourth-, and Fifth-Years

(59.1+ credits)


A maximum of $5,500 may be subsidized


A maximum of $5,500 may be subsidized


A maximum of $5,500 may be subsidized


Career Maximum Loan Amounts


A maximum of $23,000 may be subsidized


A maximum of $23,000 may be subsidized


A maximum of $23,000 may be subsidized


The graduate debt limit includes Direct Loans received for undergraduate study.

  2) How is a student loan disbursed?

Disbursement is termed as the payment of student aid funds. Colleges are required to disburse the financial aid that they get, including Direct Subsidized Loans, Direct Unsubsidized Loans, and Federal Pell Grants, at the start of each academic term. Federal Work-Study funds are disbursed as the money is earned. The disbursement is done through funds that are credited for the current years charges such as Tuition and fees, Books, room, boarding, and other college-related charges.

  3) How long does it take to get a loan approved?

After the loan gets approved it would take approx two months for the amount to be transferred to your college or to you, and if the money is sent to the college if any amount is remaining it would take 1-2 weeks for the money to be refunded to you.

  4) Are student loans included in income?

Funds from student loans are not considered taxable income and they should not be included in your income tax return.

  5) How long does it take to default on a student loan?

In case of most of the student federal loans, you will default if you do not make payment for more than 270 days.