The Quick and Dirty Guide to Your Student Loan Options

Going to college is important for most students graduating high school. However, one of the greatest sources of stress comes from having to pay for college. It is quite often the case that students will need to take out loans to be able to pay for college. In this article, we outline what the best options are for students, in terms of available loans.

First, what is a student loan? Briefly explained, a student loan is borrowing money to be able to pay for school, with a fixed interest rate. As mentioned above, the most common reason for students to take out loans is due to the fact that money may not be readily available for them to pay their tuition fees. It is important to understand the differences between the types of student loans, so students know exactly what they will be paying for, and how much it will cost them in the long-run. Below are five loan programs that are available to students, along with a short explanation of what they are.

Federal Perkins Loans

• The Federal Perkins Loan is geared towards helping needy students who want to go to college, but do not have the funds to do so. This is a loan with a low fixed interest rate, and is available for 1,700 post-secondary education schools. An added bonus is that the student does not need to make any loan payments while they are attending college.
• This loan would be the most beneficial to students in the highest financial need category, and who would not want to take out more than $27,500 in student loans.
• Federal Perkins Loan: You can check out the Federal Perkins Loan government web site for more information on what the loan is, and who is eligible for application!

Federal Direct Subsidized Loans

• A Federal Direct Subsidized Loan is one that offers better benefits for needier students. The U.S. Department of Education will help pay the interest on these types of loans.
• The students who would reap the most benefit from this loan would be those who are at least attending college part-time, in financial need.
• Federal Direct Subsidized Loans: You can do further, and more extensive, research on what the criteria is to apply for this loan on their website!

Federal Direct Unsubsidized Loans

• Geared towards helping all students, this loan does not require proof of financial need for the loan. The school the student is attending ultimately decides how much money a student can take out in loans. The government does not pay any portion of this loan. The interest and loan amount are the responsibility of the student to pay back at all times.
• This type of loan would be most beneficial to students who need to borrow money and pay it back in increments in order to be able to attend college.
• Federal Direct Unsubsidized Loans: Get more information on what this loan is and how it works on the official website!

Federal Parent PLUS Loans

• A Federal Parent PLUS Loan is an unsubsidized loan from the government. Interest is charged throughout all periods of college credit earned, for which the loan is used. You must be the student’s biological or adoptive parent or the student’s stepparent, if the biological or adoptive parent has remarried at the time of application. The student must be under 24 years of age.
• In addition to students using this loan as a resource, his loan is also intended for the parents of dependent students. It would be beneficial to parents who want to send their children to college, but do not have all the finances available.
• Federal Parent PLUS Loans: Check out their website for more information about this type of loan, and how families can qualify!

Private (Alternative) and State Loans

• These types of loans are given out by banks, universities, private organizations, and state governments. Some don’t have fixed interest rates, which means they are subject to increase over time. There are others, however, that still offer fixed interest rates. Be sure to research heavily before taking out a private loan!
• This is a type of loan that is available to students with good credit, but often times this means a parent must cosign for the loan, as most college students have not yet built up a credit report.
• Visit a college’s financial aid department for more information on these types of loans!

All of these loans are meant to help students pay their way through college. As long as students keep up on payments and do not let themselves accumulate too much interest or debt, these are very positive programs for students to become part of!