Types Of Student Loans

Private-student-loansIf you plan to apply for a student loan be sure you understand exactly what terms you are contracting to pay There are different types of student loans with different payment options and requirements.

There are basically two types of student loans. Those which are subsidized loans and those which are unsubsidized.

With the subsidized loan you do not need to make any interest payments as long as you are attending school at least half-time. The U.S. Department of Education makes the interest payment for you.

With the unsubsidized loan you are responsible for paying the interest on the loan from the beginning although payment may be deferred until you leave school.

Interest rates for a student loan may be either a affixed rate or a variable rate. Federal loans are fixed rates. This means you pay the same interest percentage rate for the life of the loan.

Variable loan interest rates are often applied to private student loans. With a variable rate the interest on your student loan can fluctuate from time to time.

Here are a few types of student loans. Stafford loans are through the federal government’s Federal Direct Student Loan Program. These loans are available as either subsidized or unsubsidized Stafford loans.

With the subsidized loan you do not need to make any payments until after you graduate. While you are in school the government pays your interest for you. These loans are for students who can show a financial hardship and usually their family income is below $50,000. The amount an undergraduate can borrow depends on what year they are in at school   There is a total limit on funds available to an undergraduate during their school years.

07-01-14-student-loansGraduate and medical students are eligible to borrow more then undergraduate students.

Unsubsidized Stafford loans do not relieve the student from making interest payments. You are responsible for the interest from the inception of the loan, however, payment may be deferred until graduation. All students are eligible for these loans.

Undergraduates have a lower cap on the amount they may borrow then graduate or medical students.

Perkins loans have a low fixed interest rate. These loans are available to those students who have a serious financial need. The loans are subsidized so no interest payments are due from the student while in school.

There are several additional types of federal student loans available such as the PLUS loans which may be available to parents and students.

Private Education loans are an option if federal loans do not fully meet your needs for your student loan. These are available from private financial lenders such and banks and approval for these loans depend on your credit history. Rates are probably higher then with the federal loans and may have a variable not a fixed income rate.