More and more students are turning to student loans to help finance their schooling. Those who are interested to apply for a student financial aid can choose from three different support programs, namely, student loans, parent loans, and the private student loans. The student loans are categorized under the federal loans. Federal loans include the Federal Stafford student financial aid programs and the Perkins student support programs. Parent loans are also known as Parent Loan for Undergraduate Students (PLUS). The last student financial support program is under the private student loans or also referred to as the alternative student loans.
Federal Student Loans
Beginning the 1st of July 2010, all the new federal student education support loans have been processed through the program called Direct Loan. These federal education loans are processed through the school’s financial aid office. The United States Department of Education has set aside the budget for the funds that are being provided in this type of student loan. Aside from the federal student loans, the Parent Loans for Undergraduate Students (PLUS) are also included in this program.
The rules and regulations to be followed in the application for the Federal Stafford Loans, the Consolidation loans, and the PLUS loans are similar to those previously available federally-guaranteed student loans. However, more and more parents and students prefer applying for the Federal Direct PLUS loans since not only is the approval rate higher, the interest rate is lower compared to the previously available federally-guaranteed student loans.
Federal Stafford Loans
The federal government is in charge for the regulation of Federal Stafford Loans. These student financial support program depends on the financial need of the applicant. It can be obtained through various organizations, including directly from the government itself, through credit unions or through banks. The Federal Stafford loans are further categorized into three main types. These include the Subsidized Federal Stafford Loan, the Unsubsidized Federal Stafford Loan, and the Additional Unsubsidized Federal Stafford Loan.
Types of Federal Student Loans
For a long term, need-based student loan, this falls under the Subsidized Federal Stafford Loan. This type of student financial support program has a low interest repayment rate. Being a “subsidized” student loan means that, the accumulated loan’s interest will be paid by the government while the student is still in school. Those students who may need to request for a deferment or for a grace period on their loan can also apply for the Subsidized Federal Stafford Loan.
For a long term, non-need basis that also comes with a low interest repayment rate, this type of loan falls under the category of the Unsubsidized Stafford Loan. This is the best type of financial support aid loans for students who were not able to qualify for the other types of student loans. This student loan program can also help students who are in need of more money aside from the loans provided to them. Almost all types of household incomes can qualify for this student financial aid program. However, the term “unsubsidized” means that the person who loaned the money is responsible for paying the interest on the loan.
Federal Parent Loans for Undergraduate Students
The Federal Parent Loans for Undergraduate Students or PLUS loan is another form of the many types of student loans provided to those who are in need of money to pay for their schooling. These loans are made available to the parents of the students who are attending school as part time or full time undergraduate students. This type of student loan is provided depending on the cost of attendance and the credit history of the parents. It has a low interest rate; however, the repayment of the loan begins after 60 to 90 days from the full loan disbursement, or once the student graduates from the school.
Federal Perkins Loans Financial Aid Program
Those students who are extremely in need of financial support for their schooling can apply for the Federal Perkins Loans program. This type of student loan has a lower interest rate than the other programs. However, the funds that are available for the Federal Perkins Loans Financial Aid Program are also limited, which means that the total amount of loan you can get can be low. The accruing of the interest does not start until the 9th month, wherein the student will enroll after the half time period of the school’s enrolment or if he or she will already graduate. One thing to remember about the Federal Perkins Loans Financial Aid Program is that this type of financial aid is being reported to the credit bureau, meaning if you are late in paying or if you default on the loan, it can be damaging to your credit.
Private Student Loans
The last type of student loans is those that are provided by private lenders. If you are in need of more than what the federal loans can provide, or if you are not qualified to apply for the other types of loans, the private student loans can be your option. Most loan companies and banks provide low interest rates on their private student loans, so this can be a good form of student loan for you. Just remember that each and every institution and organization has different rules and regulations for their loan processes, so make sure that you review their terms and regulations and compare their details before applying for any of them to avoid any problems in the future.
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