College can be expensive, and many people turn to student loans to help defray the cost. Looking for the right loan can be confusing. Federal loans are popular. Although offered by private organizations, they need to meet the guidelines of the "U.S. Department of Education through the Federal Family Education Loan Program and the Federal Direct Student Loan Program." There are many different types of federal loans, each with different terms, conditions, and requirements.
Stafford Loans
Stafford Loans can be subsidized or unsubsidized. The main difference between the two types of Stafford Loans is that the subsidized Stafford Loan is based on financial need while the unsubsidized is not, making it available to most families. Rules differ for dependents and independents, and a predetermined loan amount is allowed each year. The loan is fixed-rate, and payments need not begin while student is still in school at least half-time.
Parent PLUS Loans
The Parent PLUS Loan allows for a parent to borrow up to the total cost of the student's education, including room, board, books, and other related expenses. It's a fixed-rate loan. The student must be enrolled at least half-time. The parent needs to meet credit requirements to qualify.
Graduate PLUS Loans
A Graduate PLUS Loan is for graduate students. It's a fixed-rate loan, and no payments are required while the student is still attending school. No co-signer is required, but a credit check will be run.
Perkins Loan
Arrangements for a loan with the Federal Perkins Loan Program are made through a school's financial aid office. It's a low fixed-rate loan, and there is a maximum amount that can be borrowed. It is available to undergraduate and graduate students who are attending school at least half-time and who have "exceptional financial need." The loan is repaid directly to the school.
Student Loan Consolidation
Often it takes several different loans to be able to pay for college. The student then graduates in debt with several outstanding loans. The Federal Student Loan Consolidation Program helps to combine the loans so that only one payment is due each month. Another benefit is the possibility of a lower interest rate. To be eligible, the loans must add up to at least $20,000 and cannot be in default. No credit check is required for the Federal Student Loan Consolidation Program. Consolidation is also available through private sources.
Tags: Student Loan, fixed-rate loan, least half-time, Loan Consolidation, Loan Program