Student Loans Overview
With the rising cost of education, student loans are rapidly becoming essential in every student’s life. Although there are numerous ways available for financing education, when it comes to student loans, there are just two kinds: federal loans and private student loans.
Types of Student Loans
First and foremost are the Federal Stafford Student Loans, also known as Subsidized Loans. This is one of the popular options for paying for a college education. They are government funded and can easily be acquired from the federal government itself These loans are long term and because they are subsidized and have a low interest rate they are the easiest to pay off as well. Federal Stafford Loans are purely need based.
Another type of need based federal student loans are the Unsubsidized Stafford Loans. This loan too, carries a very low and affordable interest rate. However, unlike the subsidized option of this loan, the interest rate on these loans is paid off by the borrower instead of the federal government. This loan is ideal for students who have been disqualified for other lending options or require more money to cover their college expenses. Almost anyone can qualify for these loans. Additional Unsubsidized Stafford Loans are specifically for independent students under Federal guidelines.
Federal Plus Loans are designed for parents of students attending college in full or half-time undergraduate situations. Qualifying for these loans is based on the borrower’s credit history and attendance cost. Again, these student loans are popular because of the low interest rates.
Federal Perkins Loan is awarded on extreme financial need basis. Since these loans are reported to the credit bureaus, so late payments or defaults are documented and can damage credit scores.
You can opt for the private student loans in case all of the federal student aid options are exhausted. Even though the interest rates are steeper in private student loans, they offer substantial sums of money in funds. It is important to research these loans before making a decision about them.