STUDENT LOANS

There are three main types of school loans: federal student loans, parent loans, and private loans. Each type of school loan has a specific application process and eligibility requirements. It is in a person’s best interest to only apply for school loans if they have exhausted other resources such as scholarships and financial aid.

Most students will apply for federal school loans when they apply for financial aid. The schools you apply to will make you fill out the application at the same time so that students ineligible for financial aid will still have the option of receiving money through a government funded loan. Federal school loans, of which the Stafford loan is a type, are handled by the Department of Education.

A student has the ability to receive a subsidized or an unsubsidized federal loan. The main difference in these school loans is that subsidized loans do not charge or build any interest until the moment you start to repay them. Unsubsidized loans begin gathering interest from the moment the school loan is acquired. Almost every student is eligible for this type of loan as long they are going to an eligible school on a part or full time basis.

School loans may also come in the form of a parent loan or a Parent Loan for Undergraduate Student (PLUS) loan. PLUS loans are only available for parents of children that are undergraduates. These loans allow parents to take on the loan for their children’s education. This school loan generally has the same requirements as federal school loans. The main difference here is that the PLUS is in the parent’s name and not the child's. The parent loan, in many cases, will be a greater amount of money than what is available to an independent student.

Private school loans come from banks, credit unions, and other non federal institutions. If a person is unable to receive federal loans for whatever reason or the federal school loans they do receive is not sufficient to cover their expenses while at college, they can look to private school loans for assistance. The interest rate on a private school loan is usually going to be higher than a federal or PLUS loan. It is also very important to read and understand the loan agreement that is signed before choosing which institution to get a private loan from, so you can be sure you will be able to pay back the amount plus interest.

There are many types of student loans to choose from, and it's important to find one that is right for your particular situation. The two main types of loans are federal loans and private loans.

There are three main types of federal loans:

Federal Stafford Loans These are awarded based on financial need and are regulated by the federal government. They can be obtained from a bank, credit union, or directly from the government. There are three kinds of Federal Stafford Loans to choose from:

Subsidized Federal Stafford Loan This loan is long term and need based, with a low interest rate. 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 deferment.

Unsubsidized Stafford Loan This loan is long term, non need based, with a low interest rate. This type of loan is best for students who don't qualify for other types of financial aid, or who still need more money in addition to other forms of financial aid. Almost all household incomes qualify, and "unsubsidized" means that the interest on the loan is the responsibility of the borrower. In some cases, however, payments can be postponed.

Additional Unsubsidized Stafford Loan These loans are reserved for borrowers that are classified as independent students, as determined by Federal guidelines.

Federal Plus Loans These loans are available to parents whose children are attending college as full or half time undergraduate students. They are awarded based on credit history and cost of attendance. The interest is low on this type of loan, but repayment usually begins within 60 90 days after full disbursement of the loan, or after the student graduates.

Federal Perkins Loans Perkins loans are awarded to students based on extreme financial need, and usually have very low interest rates. The total funds available to be disbursed for these loans is limited, however, which means that the amount of the loan will likely be relatively low. The interest doesn't start to accrue until 9 months after a student drops below half time enrollment or graduates. If you're not sure if you qualify for 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 are late on payments, or default on your loan, it could damage your credit.

If you don't qualify for federal loans, then you might consider looking at private lenders. Banks and loan companies often provide student loans at relatively low interest rates. Each institution is different, so be sure to check out the terms and conditions of any loan you obtain, federal or private, and make sure you know the details before signing on the dotted line.

An education loan is a loan taken to help pay for an education, usually at a college or trade school, but may also be used to pay for private schools or prep schools as well. The education loan is available in several different types.

These are student loans, parent loans and private loans. Loans are also either guaranteed or unguaranteed. Student and parent loans are most likely to be guaranteed by the government, though many agencies work for the government in this respect. Unguaranteed or unsubsidized loans are usually from private lenders only, and usually can only be obtained if one has a good credit score or significant equity.

The student loan is usually the best choice education loan for a student whose parents cannot pay for his or her education. While the student remains in school, interest on this type of education loan accrues and is paid for by the government. When the student stops attending school, the education loan is usually paid off in payments. These payments can be quite large if the loan is large, so students should borrow only what they need.

A parent education loan is a good choice for parents who don’t want their children to end their college career in debt. These can also be guaranteed, meaning that parents don’t necessarily have to have great credit scores to get a loan. Unlike the student loan, parents usually begin payments on this education loan right away. Interest rates tend to be relatively low, but a longer repayment schedule means paying quite a bit of interest.

The private education loan almost always requires good credit. Many people use the equity in their house to take out such a loan. Unlike the parent and student education loan, the private education loan is not usually need based. Often when students apply for financial aid, they are told they, or their parents, make too much money to qualify. In these cases, those who do not have the money upfront to pay school costs may use equity to obtain loans.