| All prospective college students should be in | | | | make interest payments while enrolled in |
| the position to make an educated decision | | | | college. These interest payments can be |
| about how to finance their higher education. | | | | deferred, but if they are, the interest can |
| There are many different kinds of student | | | | be added back onto the principle of the loan |
| loans available, and this may make the choice | | | | and thereby increase to total amount of the |
| more difficult. But by becoming educated | | | | loan. |
| about the differences among the various | | | | |
| loans, it will be easier to choose the best | | | | PLUS Loans |
| loan for you. | | | | |
| | | | PLUS is an acronym for Parent Loans for |
| Private and Federal Student Loans | | | | Undergraduate Students. These loans are |
| | | | obtained by a student's parents to pay for |
| The most basic way to categorize student | | | | the cost of their child's college education. |
| loans is by separating them into federal and | | | | Because there is a credit underwriting |
| private loans. Federal student loans are | | | | process for PLUS loans, it is possible to be |
| provided and supported by the federal | | | | turned down for the loan if the parent does |
| government. Private banks may fund some | | | | not qualify. |
| federal student loans, but even in these | | | | |
| cases the interest rate, fees, and maximum | | | | PLUS loans may be obtained by graduate |
| amount are set by the federal government. | | | | students to pay for their own education. |
| | | | |
| Private loans are provided by private lending | | | | Perkins Loans |
| institutions. Private student loans usually | | | | |
| have higher interest rates than federal | | | | Students in extreme financial need may be |
| student loans. Private loans also have a | | | | given a Perkins loan. There are 1,800 |
| more stringent approval process and usually | | | | educational institutions participating in the |
| require a good credit rating and a minimum | | | | program, and each is alloted a certain amount |
| income level. | | | | of money to award. The amount of funds |
| | | | received and the student who will receive the |
| Types of Federal Student Loans | | | | funds is determined by each college's |
| | | | financial aid department. There is only a |
| Federal loans can be further categorized. | | | | limited amount of money available, so Perkins |
| | | | loans are usually low. |
| Stafford Loans can be obtained by students to | | | | |
| fund their college education and are based on | | | | Student Loan Applications |
| financial need. Stafford loans can be | | | | |
| subsidized or unsubsidized. | | | | To apply for a federal student loan, you must |
| | | | complete a Federal Application for Student |
| The government pays the interest accured on | | | | Aid. Without this form you will not be able |
| subsidized Stafford loans while the student | | | | to receive any federal student loans |
| is attending school. Subsidized Stafford | | | | regardless of your financial situation. |
| loans are based on financial need. | | | | |
| | | | To obtain for a private student loan, you |
| Unsubsidized Stafford loans are not based on | | | | must apply directly with the lender you would |
| financial need. The student is expected to | | | | like to borrow from. |