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