Starting college can be a very exciting time. After all of the hard work that you did in high school, all the tests you took and all of the applications you have filled out, you finally get to choose a school that works best for you major and will help prepare you for your adult life. All of this can be exciting, and very overwhelming. There are a lot of choices that need to be made when first starting college. One of the major decisions people have to make is what type of student loan they want in order to help them pay for college.
There are many types of student loan options out there and one of the options that you can choose is a federal student loan. Federal student loans are loans made by the government to help people pay for their college education. Usually, federal loans have lower interest rates and more flexible repayment options than private loans from banks and other sources. If you decide that you want to get a federal student loan, you will want to know about the different types of federal student loans. There are three common ones, and they are called Stafford Loans, PLUS Loans, and Perkins Loans. Each one can help different people in unique situations, and they come with their own advantages and disadvantages. Keep reading to see which one will fit your needs.
Stafford Loans
Stafford Loans are the most popular type of student loan because you can use it to help pay for college disregarding the fact that you may or may not need financial aid when paying for college. They also come as subsidized loans and unsubsidized loans. A subsidized loan means that you will not be charged any interest until after you leave school. Unsubsidized means that the interest is charged from the time the loan is disbursed until you completely pay them off. You can get this loan if you are an undergraduate or graduate student who is enrolled on at least a half-time basis. The maximum amounts are set by one year of school, or by all the years combined. Whichever one you choose is up to you, whether you want one loan that covers the cost of each year individually, or one that covers all the years combined. You are able to defer payments until six months after graduation, and you do not need credit approval to get this loan.
PLUS Loans
PLUS stands for Parent Loans for Undergraduate Students. A student must be enrolled in school at least halftime to be approved for this loans. The point of this loan is to give students or parent’s money to fund the needs of whatever is not met by other financial aid programs. So, if you receive this loan, you will get the amount of your needs minus the amount you are already getting from other loans. You may have to start paying off these loans as soon as 60 days after the loans pay out. They also have higher interest rates than other loans, and you must have a good credit.
Perkins Loans
If you need a lot of help with school, a Perkins Loan may be the right loan for you. You can get a Perkins Loan if you are an undergraduate or graduate student. The Perkins Loan program is determined based on three factors: when you apply, the level of need, which is determined by your college, and the funding level that your school receives. This type of loan has a low interest rate, and the government pays any interest on these loans as long as the student is still enrolled in school.
With all of the different types of loans, plus every other decision you have to make when going to college, you will have a lot of work to do. Make sure to choose a student loan that will get you through school and that you will be able to pay off without too much worry in the future.