Education Loan


DEFINITION of 'Education Loan'

Money borrowed to finance education or school related expenses. Payments are often deferred while in school and for a six-month grace period after graduation. Sallie Mae is the largest source of education loans and handles the two major types, the Stafford loan and the Perkins loan. One of the major benefits of these types of loans is that they come with low interest rates and do not require collateral or a credit check.

BREAKING DOWN 'Education Loan'

Sallie Mae acts as a secondary market for student loans. The money from a Sallie Mae loan is not actually lent to the student or their parents by the government. Once the loan has been completed, the lender will then sell the loan back to Sallie Mae in order to free up their funds to help additional students.

  1. Saber Currency

    A proposed Brazilian currency that would be handed out by the ...
  2. Expected Family Contribution - ...

    The amount of money that a student's family is expected to contribute ...
  3. Stipend

    A predetermined amount of money that is provided periodically ...
  4. Pell Grant

    A program that awards money to eligible undergraduate and, in ...
  5. Cost Of Attendance

    A figure provided by colleges and/or college financial offices ...
  6. Education Credit

    A type of tax credit available to students of a post-secondary ...
Related Articles
  1. Budgeting

    Budgeting While You're In College

    Test your money management skills as you work your way through university.
  2. Credit & Loans

    Can You Live A Debt-Free Life?

    Avoiding loans goes against the norm but it can be possible - and enjoyable.
  3. Credit & Loans

    You CAN Afford To Study Abroad

    Before you jump on the plane, understand the rules and regulations in place. Then, enjoy your time studying aborad!
  4. Credit & Loans

    All About Student Loans

    Student loans bridge the gap between college savings, scholarships and the part-time work.
  5. Budgeting

    Pay For A College Education With Retirement Funds

    These savings vehicles may be better than college saving funds for some families.
  6. Retirement

    College Cost Reduction Act Helps Students Meet Payments

    This legislation can help families pay college costs and reduce student debt.
  7. Personal Finance

    College Students are Failing Financial Literacy

    Financial trends among college students are a cause for concern, prompting a renewed emphasis on financial literacy.
  8. Credit & Loans

    10 Ways Student Debt Can Destroy Your Life

    If you're getting a student loan, think critically about how you will manage your loan. Student debt could have a profound negative impact on your life.
  9. Credit & Loans

    Explaining Equated Monthly Installments

    An equated monthly installment is a fixed payment a borrower makes to a lender on the same date of each month.
  10. Budgeting

    Top 10 Ways College Students Can Save Money

    College costs are soaring, but fortunately, there are several ways for college students to save money - and some are quite painless.
  1. Student loans, federal and private: what's the difference?

    The cost of a college education now rivals many home prices, making student loans a huge debt that many young people face ... Read Full Answer >>
  2. Can my IRA be used for college tuition?

    You can use your IRA to pay for college tuition even before you reach retirement age. In fact, your retirement savings can ... Read Full Answer >>
  3. What are the long-term effects of delinquent accounts?

    Delinquency occurs when borrowers fail to make payments on their loans. All loan borrowers should do their best to avoid ... Read Full Answer >>
  4. What are the differences between delinquency and default?

    Delinquency and default are loan terms that describe failure to make a required payment. A loan in delinquency occurs the ... Read Full Answer >>
  5. When capitalizing interest, will interest accrue while you are in a deferment?

    When capitalizing interest, interest accrues while a person is in a deferment of his loan. In the event of a deferment, the ... Read Full Answer >>
  6. Why is more interest paid over the life of a loan when it is capitalized?

    More interest is paid over the life of a loan when that interest is capitalized because the capitalized interest is added ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!