The 3 Types of Student Loans

Learning about all of the different types of student loans that are available to you can help you choose the right loan for your financial situation. Here are a few of the different types of student loans that are currently available.

1. Stafford Loans

Stafford loans are the most common type of student loans that are available today. Practically anyone can qualify for a Stafford student loan if they want one. In order to get this type of loan, you have to be an American citizen and you cannot have any outstanding debts to the federal government. This type of loan has two general categories, subsidized and unsubsidized loans.

A subsidized loan is when the government will pay for the interest for you while you are in school. The interest rate on the loan is also going to be a bit lower with a subsidized loan. With an unsubsidized loan, you are going to have to pay for the interest that occurs while you are in school. If you do not want to make payments while you are in school, you can defer these payments until you are out of school. When you begin repaying Stafford loans, you will have several repayment options. You can choose a standard repayment plan, a graduated repayment plan or an income-based repayment plan. 

2. PLUS Loans

PLUS loans are loans that can be taken out by parents in order to pay for their child's education. These loans allow parents access to the funds that they need to pay for a child's college education. With this loan program, you can get a very low fixed interest rate. Another benefit of this program is that you can get a discount on your interest rate if you enroll in an automatic payment program. With PLUS loans, you can also deduct the interest that you pay from your taxable income. This could provide you with a nice tax break at the end of the year.

3. Perkins Loans

Another type of Federal student loan that you could take advantage of is the Perkins loan. The Perkins loan is similar to the Stafford loan except that it is issued directly from the educational institution that you are attending. You have to be attending one of the 1800 educational institutions that qualify for this program.

The Perkins loan program is designed to help those that are in serious financial need. While everyone can qualify for a Stafford loan, this loan program is a little bit more selective. You will have to fill out a FAFSA and the government is going to determine if you are in desperate enough financial need. They will look at such things as your income, the income of your parents, and if your siblings are also in college.

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