A student loan is a lending product designed specifically for college expenses. They are often easier to obtain than other forms of financing, like personal loans, as it’s generally well understood that incoming college students won’t have much on their credit reports.
The interest rate represents how much you will ultimately pay the lender for the ability to borrow funds. This is money owed on top of the principal and it isn’t calculated just once.
The interest rates are lower, saving your child money over the entire life of the loan. Also, interest isn’t assessed while your student is in school at least half-time.
They aren’t issued by the federal government, so their terms and qualifications can vary depending on the lender. Often, it is best to view these as personal loans.