Usually, most parents fully provide for their children until the latter receive a diploma of secondary special or higher education. In other words, until young people get a job. Only a few act differently, but there are always good reasons for this.
In the United States, the exact opposite is happening. Not all Americans have enough wealth to learn a child at their own expense, many take loans for these purposes. Of course, in our country this can also often be found, while parents issue loans for themselves, but not children. But most American students pay for their tuition (including loans) on their own.
The main reasons why young Americans apply for loans for themselves
First of all: it is much easier than getting credit money to a working American citizen.
There are several types of education lending in the country: federal loans, private and parental loans. On private loans, an inflated interest is set, so it is unprofitable to take it. In addition, to consider the application, you must need a guarantor who is a US citizen and has a good income.
Some parents still decide to help their child get an education and agree to take a parental loan. But you need to start payments on it immediately, which is not suitable for every family.
Therefore, the lion's share of loans falls on federal loans. About 80% of citizens choose federal credit programs, and this is not accidental: the interest in them is much lower, and you do not need to prove your solvency when receiving money. Moreover, the terms of payments in federal loans are very pleasant: debt repayment can be stretched for 20-30 years. Another significant advantage of state lending programs is the ability to start paying off the loan not immediately, but after graduation.
As for the difference in interest, it is insignificant: under the federal program, a loan can be taken at 8.2% per annum, and the rate on parental loans is about 9%. However, federal loans also provide preferential rates, which reach up to 3.4%, however, while increasing the terms of payments to a quarter of a century.
It is worth noting that no matter how favorable the conditions for granting state loans may seem, the cost of studying does not pay off quickly. After all, you can spend tens and even hundreds of thousands of dollars to get a good education , and few people can start earning well at the very beginning of their career.
