Are There Specific Student Loans for Technical Colleges?

Student loans for technical colleges come in many forms. There are the more general loans that can be used for different types of colleges, as well as the more specialized loans that are geared specifically towards the financial needs of technical college students. They are usually private loans that are not guaranteed by the federal government. Such loans will usually allow you to borrow more money than federal loans, but they also come with more fees and larger, more variable interest rates. If you are considering enrolling in a technical college, you should use the more general loans to cover most expenses and the customized loans for whatever is left over.

Federal Student Loans

Federal student loans are issued by the federal government through the US Department of Education and funded by the affiliated private lenders. Federal loans are backed by the federal government, which allows lenders to charge you lower interest rates than what you would get with private loans. Federal student loans will cover any part of your overall cost of attending a technical school of your choice. This includes tuition, fees and room-and-board.

Federal student loans can be divided into two categories, based on how the government deals with interest:

  • Subsidized federal student loans. These are loans where the federal government pays the interest for you. To determine if you are eligible, the government compares your and/or your family's income to the cost of attending a technical school of your choice. The results vary depending in each case, but people in lower income brackets have a much better chance of qualifying for a subsidized loan.
  • Unsubsidized federal student loans. These are loans where you would have to pay interest on your own. They don't come with any financial need requirements, and you can usually borrow more money then you would with subsidized loans.

In order to qualify for federal student loans, you must be either a US Citizen or a lawful permanent resident alien, and you must remain enrolled on at least half-time bases. If you don't, the loan will be revoked until you increase your enrollment.

Private Student Loans

Private student loans are issued by private lenders directly. They are not bound by federally-mandated caps and other restrictions. This allows them to offer more money then federal loans. While undergraduate federal loans generally don't exceed $10,000 per year, you may be able to get as much as $45,000 per year in some cases. Many private student loans allow you to be enrolled on less then half-time bases, which gives you more flexibility. You also have more choice in terms of grace periods and pre-payment penalties. Private loans are approved quicker than federal loans, especially if they are direct-to-consumer private student loans.

However, unlike federal loans, private loans will require you to have a good credit rating in order to qualify. You can get around this by getting a co-signer, such as a parent or guardian who has a good credit history.

As mentioned before, private loans tend to have higher interest rates then federal loans. They also change more frequently and are more likely to be variable, which means that they will change based on the general financial conditions rather than a fixed percentage. Direct-to-customer private student loans tend to have larger interest rates.

Need a Student Loan? Click here!