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2. PERKINS LOANS.
These are subsidized loans that are reserved for undergraduates and graduate school students who have extreme financial needs. All other student loans have interest rates that are adjusted by Congress every yea, but Perkins loans are always set at 5% and do not have fees. The Federal government is shutting down this program, but students who have qualified can still receive Perkins loans until September 30, 2017, while graduate school borrower can still avail of the loan until September 30, 2016.
3. DIRECT UNSUBSIDIZED LOANS.
This is also called unsubsidized Stafford loans, and this is the most common type of all student loans. These student loans are available to both undergraduate and graduate borrowers, and they accrue interest while you are still in school. The loan’s interest is then capitalized, (or added to your balance) at the end of your given grace period.
4. GRAD PLUS LOANS.
These are loans for graduate and professional students. There are no borrowing limits, but you need to provide decent credit to qualify. There should not be any negative marks on your credit scores.
5. PARENT PLUS LOANS.
This is for parents of dependent undergraduate students. The parents’ credit histories have to be unblemished to qualify. Parents can borrow as much money needed to fund their student’s college tuition. While it is possible to take out multiple loans to cover your tuition fees, keep in mind that there are set limits to how much you can borrow each year. This is based on the type of loan you applied for, your year in school, and if you are a dependent, or independent student. For graduate students, loans taken while in their undergraduate studies will be added to the total limit.
Private Student loans And When You Should Use One
Parents and graduate students who have good credit standings (undergrads with co-signs who have good credit as well)) may get a better interest rate with private student loans. More than half of those who borrow may qualify for better loan rates unless they qualify for federal direct subsidized loans.
Having said that, it is still recommended that you consider applying for federal student loans, despite the better rate offered by private loans, because federal student loans offer income-driven payment plans, deferment, forbearance, and forgiveness programs. Private lenders offer great rates, but not all offer these kinds of repayment plans. And if they do, it is not as favorable. Private student loans also require a full underwriting process. You must have good credit and enough extra money to be able to pay for your loans, given the other expenses you may have. You can get a co-signer if you do not qualify. Banks, credit unions, and other private online lenders offer private student loans with varying terms.
Regardless of where you will be getting your student loans, always compare the interest rates, fees, and borrowers protections of the different types of student loans available. You will be paying for this loan for quite some time so it has to be one that you can handle paying for.
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