Student Loan Tools and Advice
Federal Loans
Federal Loans are quite simply put, loans that are funded and secured by the Federal Government.
Stafford Loan
Stafford loans represent the largest component of the FFELP and FDL and are available as both subsidized and unsubsidized versions.
Subsidized Stafford
Subsidized Stafford loans are loans that are available to students who demonstrate financial need. The Federal Government pays the interest on these loans while the student is in school, during a six-month grace period after the student leaves school, and during authorized periods of loan deferment.
Unsubsidized Stafford
Unsubsidized Stafford loans differ from the subsidized version in the sense that they do not require financial need to qualify, however the Federal Government does NOT pay for the interest while in or out of school. Students have the option of paying the interest each month or allowing it to accrue and be added to the principal amount due.
PLUS Loans
Parent Loans for Undergraduate Students (PLUS) are loans where parents can borrow up to the total cost of their children's education, less financial aid from other sources.
Undergraduate PLUS
There are some specific requirements that must be met in order for parents to borrow using the undergraduate PLUS program:
- Student must be a dependent
- Repayment typically begins 2 months after the loan disbursement is made
- No federally subsidized payments of interest
- There is a credit check of parents
- No financial need to qualify
Graduate PLUS
Graduate and professional students may also take out PLUS loans. The requirements are very similar to the undergraduate program. There is also the added incentive of being able to apply for deferment under the agreement that the student is enrolled in school at least half-time.
The Perkins Loan
The Perkins loan is available to graduate and undergraduate students and offers a fixed rate of 5%. There is a maximum award for undergraduate students of $4,000 / yr. For graduate students there is a maximum of $6,000 / yr. The cumulative total for graduate students cannot exceed $40,000 when combined with the undergraduate Perkins program.
Consolidation Loans
Borrowers can choose to consolidate multiple loans into a single loan, thereby leaving them with one monthly payment. Additionally, depending on the outstanding loan balance, it is sometimes possible to lengthen the loan terms over a longer repayment period.
Consolidation loans can be secured through either federal programs or private lenders
Private Loans
Where federal loan programs can be limited by program restrictions, particularly with regard to the amounts that may be borrowed, private loans tend to be more favorable. As a result, you may find that you will need more money to complete your education. Many students look to the private sector to secure the loans for the remaining funds that they need.
Although federally backed loans are typically viewed as more favorable than private loans, it’s very common for students to use a combination of federal and private loans to pay for their educations. Private loans may require a credit application and it is possible that (depending on credit history) you will need a co-signer to secure a private loan. Private loans can vary depending on the lender, so it’s a good idea to research the loan programs that are available through the private sector.
