Overview of student loan options

by Grace

This useful summary of the most common student loan options comes from The College Helper

1. Federal Student Loans

A. Perkins Loans – Students can only qualify for this loan if they display exceptional financial need.  These loans are available to both graduate and undergraduate students.  Perkins loans are given through the college or university you will be attending.  Unlike other types of student loans, they will be repaid directly to the university.

B. Subsidized Student Loans – Students qualify for these types of loans based on financial need.  The requirements aren’t as stringent as the Perkins loans process, but you still must qualify. The interest on these loans is deferred (or postponed) until after you graduate.  What this means is that even though you are responsible for repaying this loan 6 months after graduation, the interest attached on these loans does not begin to accrue (or accumulate) until after that 6 month point.

C. Unsubsidized Student Loans – Any student can qualify for these types of loans.  The only requirements are that you must be a student and enrolled at least part-time.  The interest on these loans accrues (or accumulates) immediately, which means that the total loan value could really add up over time.

2. Federal PLUS Loans

Federal PLUS loans are loans that are taken out by parents to cover their child’s educational expenses.  The maximum amount that any parent can borrow is the cost of attendance, minus any financial aid that the student has already received.  The repayment period for these loans starts 60 days after the funds have been dispersed to the school and the repayment period can be up to 10 years.

3. Private Student Loans

Some students opt to go with private loans, rather than Federal student loans.  Your qualification for these types of loans is based on your credit score.  These loans must also be used for educational purposes only.  If you do decide to go with private loans, please READ THE FINE PRINT…every company has different loan terms and conditions.  Take your time to evaluate a lot of different companies and compare prices before taking out a private loan.  These types of loans should only be done as a LAST RESORT.

MORE:  For maximum borrowing amounts and interest rates on federal loans check out FinAid Student Loans.

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