Types of Student Loans

Most high school students could not afford to go to college without the help of student loans. Understanding the different types of loans and the types of funds that are available to you can make paying for your college education easier and more affordable. Choosing the right type of loan is essential to making the best decision for your financial situation.

Federal Loans

There are certain types of loans administered by the federal government. Perhaps the most well known is called the Federal Direct Stafford Loan. This loan is unique because it is a long-term loan paid over many years with low interest rates. There are three types of Federal Direct Stafford Loans: the direct subsidized loan and the indirect subsidized loan:

  • The direct subsidized loan allows the government to pay the interest for the student while the student remains in college. After graduation the student is responsible for the interest on the student loan. This type of loan is available to students based on financial need.
  • The indirect unsubsidized loan holds the student responsible for the interest while they are in college. However the student has the choice of deferring interest payments until after graduation, or paying them while they are a student.
  • If you are a student under 24 years of age, single, and dependant on your parentsm, you may qualify for the Federal Direct PLUS Loan. This loan is granted based, and is awarded based on your parent’s credit history and tuition of the student’s college of choice.
  • The Federal Perkins Loan is given to students who have the most financial need. These loans are given on a very limited basis and are competitive due to the extremely low interest rates that don’t accumulate until after college.

These, and other types of loans are typically calculated based on the information provided on your FAFSA form. Because of this, it is important to fill out and submit your FAFSA form as soon as possible. Speak with an admissions representative from your college of choice to learn about other types of loans that may be available to you.

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