Due to the high cost of higher education more and more parents and students are taking out student loans. These loans may be taken to pay tuition fees, board and lodging, computers, etc. Students in America can take federal student loans directly which are termed as direct student loans and no payment becomes due while they are studying. Should a student drop out and re-enrolls during half time status the loan will continue. Federal student loans taken by parents have a higher limit but the repayments start immediately. Private student loans can be taken by students and parents and have a higher limit and there are no immediate payments that need to be made. In private loans the interest is accrued and charged once the loan repayment process is started. Private student loans can also be taken along with a federal student loan.

All students who are going to college or university are entitled to a federal student loan. These loans may be subsidized or may not be subsidized depending on the student’s financial position. If a loan is subsidized the student will only pay back the loan amount without any interest charges. If the loan is not subsidized the student will pay back the loan amount plus the accrued interest on it. All direct student loans become due six months after the student has completed their studies.

The Federal parents’ loan (PLUS) which stands for Parent Loan for Undergraduate Students, allows parents to take student loans to cover the cost of their children who are in college or university. A parent loan becomes payable immediately and parents have to start paying the installments upon receiving the loan. They also have to pay 8.5% interest on the loan. Now under a new legislation graduating students can also take PLUS loans in their own names.

Private student loans are made by banks and other financial institutions and the Federal Government does not guarantee these loans. These loans are also of two types which are school channel and direct to consumer. The school channel loans take longer to process and are signed of by the school. The school receives the loan direct from the lender. This type of loan has a lower interest rate then the direct to consumer student loan.

There are financial institutions that help in student loan consolidation and provide student loan consolidation services this makes it easier for the students to repay as they don’t have to worry about making multiple payments and can also get the repayment period extended. There are agencies that do federal student loan consolidation also. Student loan repayment normally starts six months after a student has graduated and become a part of the workforce.

Students may have taken multiple student loans during the same term of there studies or may have taken in college and another in university. So students can end their education and have a series of loans that they took during their studies and once they get a job they are required to repay these loans. Students who default on their repayments with private financial institutions in USA have very little protection and can be treated very harshly and may also end up paying penalties on the defaulted loans.

A large number of students or their parents take out student loans to help put the student through college and university and these loans may require several years to repay. Students who have taken multiple loans then look for student loan debt consolidation so that they don’t have to worry about repaying multiple loans and can just make single payment installments for the term of the loan.