Types Of Federal Student Loans

Most college students need help paying for their education. Luckily there are several federal student loans available that can provide a great deal of financial assistance. Although each loan is provided by the U.S. Department of Education, there are different rates, terms and requirements for each. In this article we will take a look at the different types of loans provided by the U.S. government so you can get a better idea about which loan or loans are right for you.

Probably the most commonly applied for and awarded student loan is the Stafford Loan. These loans are easy to obtain for most students regardless of their financial situation. There are a few simple requirements students must meet. Students must be citizens of the United States or eligible non-citizens. Also, they must have completed and submitted a FAFSA application.

There is no credit check and no payments while the student is still in school. The amount you are allowed to borrow based on the status of your degree and what year of college you are in. Stafford loans can be subsidized or unsubsidized. Subsidized loans do not begin charging interest until the student finishes school, while unsubsidized loans charge interest starting from the day of disbursement until paid in full.

The FAFSA form is required also for other types of federal loans, such as the Perkins Loan. This loan has fixed interest and is determined by your financial need. When you apply for the loan and the funding level of your college also factor in. Perkins loans can be repaid over a ten year period, and are paid to the school rather than to the U.S. Department of Education even though they are the ones providing the funds.

PLUS Loans are another loan type, with PLUS standing for Parent Loans for Undergraduate Students. These federal loans are made for parents whose children are enrolled half to full time at a college of university. The maximum amount of money allowed is the difference between any other financial aid received by the student and the cost of tuition. These loans do not have deferred interest and payments on PLUS loans are due immediately rather than after graduation. It is a good idea, and often a requirement, to sit down with the financial aid officer at your school to discuss the loans available and figure out what you qualify for and go over the application process.






 

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