Types of Student Loans Available

As a high school student the next step you wish to take is to join college. You need money to do this as college education costs a lot of money. If you’re independent or your parents are unable to support you then you need to think about student loans to support you through college. Our Federal government has come up with various financial packages that will help students like us to pass out of college and get a good job.There are two types of student loans available. Federal loans and Private loans. These loans help a student to pay for tuition, books and living expenses. The major advantage of these loans are the returning period starts six months after you complete your education and the interest on the amount is very low. That is why it is attractive for students to go in for student loans. The popular Federal student loans are Stafford Loan, Perkins Loan and Plus Loan.Stafford Loan- Federal Stafford loans are given by the government for students who wish to study at least half time in college (graduate and under graduate courses). This is a very popular loan that is availed by students as it is a fixed loan with very low interest rates. A student is allowed to borrow $20,000 per school year. The students can borrow this amount directly from the Department of Education through the school they are joining in.Perkins Loan- Federal Perkins Loan is given to students who are in financial need for attending post secondary education programs. The amount depends upon the individual’s need and there is a standard formula that the financial aid office follows to disburse the amount directly to the institution where the student is enrolled. It is advisable to apply for Federal aid as early as possible as it is on a first come first serve basis.Plus Loan- Federal Plus Loan is given to parents who wish to educate their children in college. Parents who have good credit rating can apply for Plus Loan to help finance their son’s or daughter’s college expenses. This money can be used for tuition, supplies, housing and so on. The procedure is the same as the other two Federal Loans. Here EFC (expected family contribution) is also looked into so that the financial aid office can arrive at the exact amount to be disbursed. Also the parent’s credit rating including income tax returns, assets and loans if any as well as how many children are studying in college is taken into consideration before deciding upon the loan entitlement.Private loans – Besides Federal loans there are private banks and lenders who offer student loans as well. The criterion is the same and the procedure is also the same. FAFSA form should be filled and submitted to the lender along with your application. Some of the popular private student loan programs are Sallie Mae, Citi student loans, Monticello, Chase loans to name a few. Private loans basically depend upon your credit worthiness. A co-signer with good credit rating can get you a private student loan. Though it is fixed interest rate, be careful before you borrow.

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