Financial Aid Loans for Financial Assistance

2007-12-10 10:49:41

( Financial )



Financial aid loans are a form of financial assistance requested and granted to the applicant to help them meet their financial needs for the time being, whether he is a student or a businessman. They are borrowed money that must be repaid with interest. These loans differ as to how much an interest must be paid. These institutions sometimes vary their interest rates using the applicant’s personal credit history and financial capabilities as their basis. These aids may come from many sources. The sources are usually business institutions, educational institutions, non-profit organizations and the government.

Applicants of financial aid loans are usually students and people who want to start or expand a business. Student financial aids and business loans are the priorities of financial aid institutions in giving the proper benefits of a loan. Applicants must meet eligibility requirements specified when they apply for financial aid loans. An applicant’s eligibility is determined through his income and what he can afford to pay back.

Financial aid loans are unsecured loan products which mean they do not take collaterals from applicants. The only guarantee they have is a legally binding document that an applicant must sign which is called a promissory note. By signing it, an applicant is taking full responsibility for the loans they apply for. When an applicant defaults his loans, he shall be ineligible for future loans.

There are two types of financial aid loans: subsidized and unsubsidized loans. Subsidized loans are need-based loans in which the government pays the interest for the applicant for a specified time frame. The applicant’s only responsibility is to pay back the principal amount of the loan. Unsubsidized loans are not need-based and the government will not pay the interest for the applicant. Applicants will be responsible for paying the accrued interest along with the principal amount of the loan.


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