Home » Finance » Personal Finance

Types of Student Loans

Oct 31, 2007
All prospective college students should be in the position to make an educated decision about how to finance their higher education. There are many different kinds of student loans available, and this may make the choice more difficult. But by becoming educated about the differences among the various loans, it will be easier to choose the best loan for you.

Private and Federal Student Loans
The most basic way to categorize student loans is by separating them into federal and private loans. Federal student loans are provided and supported by the federal government. Private banks may fund some federal student loans, but even in these cases the interest rate, fees, and maximum amount are set by the federal government.

Private loans are provided by private lending institutions. Private student loans usually have higher interest rates than federal student loans. Private loans also have a more stringent approval process and usually require a good credit rating and a minimum income level.

Types of Federal Student Loans
Federal loans can be further categorized.

Stafford Loans can be obtained by students to fund their college education and are based on financial need. Stafford loans can be subsidized or unsubsidized.

The government pays the interest accured on subsidized Stafford loans while the student is attending school. Subsidized Stafford loans are based on financial need.

Unsubsidized Stafford loans are not based on financial need. The student is expected to make interest payments while enrolled in college. These interest payments can be deferred, but if they are, the interest can be added back onto the principle of the loan and thereby increase to total amount of the loan.

PLUS Loans
PLUS is an acronym for Parent Loans for Undergraduate Students. These loans are obtained by a student's parents to pay for the cost of their child's college education. Because there is a credit underwriting process for PLUS loans, it is possible to be turned down for the loan if the parent does not qualify.

PLUS loans may be obtained by graduate students to pay for their own education.

Perkins Loans
Students in extreme financial need may be given a Perkins loan. There are 1,800 educational institutions participating in the program, and each is alloted a certain amount of money to award. The amount of funds received and the student who will receive the funds is determined by each college's financial aid department. There is only a limited amount of money available, so Perkins loans are usually low.

Student Loan Applications
To apply for a federal student loan, you must complete a Federal Application for Student Aid. Without this form you will not be able to receive any federal student loans regardless of your financial situation.

To obtain for a private student loan, you must apply directly with the lender you would like to borrow from.
About the Author
Peter Kenny is a writer for Shop Smart Loans. Please visit us at Cash Back Credit Cards and Credit Card Consolidation Loans
Rating:
Please Rate:
(Average: Not rated)
Views: 123
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources