December 2, 2021

Learn About Different Types Of Student Loans

If you are looking for student loans, you can take heart from the fact that there are numerous loan types out there to suit different needs. You should however exercise care to find the one loan that will suit your individual needs the best. In this regard, you will do well to learn more about and choose from federal loans and those that are obtained from private sources.

Student Loans

If you are planning to avail of federal student loans, there are three types that you should know about. One of these is the Federal Stafford loan which is given to students based on their financial requirements and which is controlled by the federal government. These loans are available from banks and credit unions as well as straight from the government. For those who are looking for a Federal Stafford loan, there will be three kinds to choose from.

These include the subsidized Federal Stafford loan which is a long term loan and one that is requirement based as well as attracts a lower rate of interest. It is called a subsidized loan because the government will pay the interest on the loan as long as the student continues to study and also when they request for deferment or grace periods.

The unsubsidized Stafford loan is also a long term loan but is not based on the students needs. However, it too is available with a low rate of interest and is an ideal loan for those students that cannot qualify for other forms of financial help and who may be in need of financial aid.

The third kind of Federal Stafford loan is the one known as Additional Unsubsidized Stafford loan which is a loan that is reserved for those borrowers that are categorized as being independent students by Federal guidelines.

There are other types of federal student loans including the Federal Plus Loan and the Federal Perkins Loan. A Federal Plus Loan is a loan that is given to parents who have children that are attending colleges as fulltime students or even half time undergraduates. Such loans are given based on the credit history of the parents and also the cost of attending college.

This kind of loan also attracts a lower rate of interest but the loan has to be repaid soon after the student receives the loan or after the student has graduated. In most cases, the loan must be repaid within sixty to ninety days of the student being disbursed the funds or after they have graduated.

The Federal Perkins Loan is awarded to those students who are in dire financial straits and these loans are available at very low rates of interest. However, the total amount of money lent out under this form of loan is limited which means that the loan amount will be quite modest. Interest on the loan begins to accrue about nine months after the students attendance drops to below fifty percent or after he has graduated.

The best person to advise you regarding these kinds of student loans is your college financial aid advisor. Also, these loans will be reported to the credit bureaus; so, be sure to repay the loan on time and according to the terms of the loan.

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