Many students require financial aid to attend college, but not all students are eligible for scholarships or grants. Fortunately, there are a variety of college loans to choose from, with something for everyone. Some college loans are based on financial need, while others are government loans open to all, while others require a good credit history and can only be obtained through private lending sources. Finally, some college loans are specifically for parents of college students. The following are the most common types of loans:
Stafford Loans are a type of loan that is available to
Federal Family Education Loans (FFELs) and William D. Ford Federal Direct Loans are two types of Stafford Loans (Direct Loans). The Stafford family of loans are for students. The government funds Direct Loans, while banks and other private lenders fund FFELs. The school, not the student, decides whether to use FFEL or Direct. Both programs, however, are nearly identical in terms of eligibility and available funds, though the repayment terms may differ.
After a student completes the Free Application for Federal Student Aid, Stafford Loans are made available (FAFSA). The information is sent to each of the schools that have been chosen, and the school then puts together a financial aid package that includes the types and amounts of loans that a student is eligible for. Depending on financial need, these loans are either subsidized or unsubsidized. If a loan is subsidized, the interest is paid the federal government while the student is enrolled at least half-time in college or in a deferment or grace period.
PLUS Loans are a type of loan that allows you to
Parents of dependent students can borrow PLUS Loans, which are similar to Direct Loans or FEFLs. Borrowers must have a credit history that is acceptable. The financial aid office at a school distributes Direct PLUS Loan applications. Private lenders and the financial aid office at a school both offer FEFL PLUS Loan applications. Unsubsidized PLUS loans are always available. Although PLUS Loans have been referred to as “parent” loans in the past, they are now available to graduate and professional students with the same terms as parent loans.
Perkins Loans from the Federal Government
Perkins Loans are available at some colleges, but not all. Eligibility is determined financial need, and each school determines how funds will be distributed. Both undergraduate and graduate students are eligible for Perkins loans. There are no credit requirements, and loans are repaid to the college directly.
Loans from Private Lenders
Private loans are available when government college loans are insufficient to cover the full cost of attendance. Although a credit history is required, most loan programs allow for a co-signer if the student does not meet the criteria. Private college loans can help students who are interested in vocational programs that do not receive the same types of financial aid as traditional colleges. This allows the student to pursue the program of his or her choice.