There are many types of student loans to choose from, and it is important to find one that is right for your particular situation. The two main types of loans become federal loans and private loans.
There are three main types of federal loans:
Federal Stafford Loans – These are allocated based on financial needs and regulated by the federal government. They can be obtained from a bank, credit union or directly from the government. There are three types of federal Stafford loans to choose from:
Supported Federal Stafford Loan – This loan is long-term and needs pre-based, low interest rates. The term subsidized means that the government will pay the interest on the loan while a student is in school or when the student requests a grace period or postponement.
Subsidized Stafford Loans – This loan is long-term, non-use-based, with low interest rates. This type of loan is best for students who do not meet the conditions for other forms of financial support or who still need more money for other forms of financial support. Almost all household income qualify and subsidized means that interest on the loan is responsible for the borrower. In some cases, however, payments can be postponed.
Additional Subsidized Stafford Loan – These loans are reserved for borrowers who are classified as self-employed students, as determined by Federal Guidelines.
Federal Plus Loans – These loans are available to parents whose children attend school as full or half-time undergraduate students. They are assigned based on credit history and attendance costs. The interest is low on this type of loan, but the repayment usually begins within 60-90 days after full payment of the loan, or after the student’s graduates.
Federal Perkins Loans – Perkins loans are given to students based on extreme financial needs and usually have very low interest rates. However, the total available funds to be paid for these loans is limited, which means that the loan amount is likely to be relatively low. The interest does not start to earn until 9 months after a student falls under half-time enrollment or candidates. If you are not sure if you meet the conditions of a Perkins loan, ask a college financial aid advisor. One important thing to note about these loans: they are reported to a credit bureau, which means that if you get late on payments or default on your loan, it may hurt your credit.
If you are not eligible for federal loans then you may want to consider looking at private lenders. Banks and loan companies often provide student loan systems at relatively low interest rates. Each institution is different, so be sure to check the terms and conditions of any loan you receive, federal or private, and make sure you know the details before signing on the dotted line.