Basic Types of Student Loans

If you need help paying for college but do not qualify for grants, then you need to start looking into student loans. There are two main categories of student loans available to you: federal and private. Under each category there are several different loan types. Learning all you can about each loan option is the best way to find the right one for your needs.

If you qualify for federal student loans, you have several to choose from. The first is the Stafford Loan. This loan is available to qualifying applicants based on financial need as determined by the FAFSA. It is subsidized by the government but offered through a traditional lender. It offers flexible repayment options, a generous grace period after graduation, and no prepayment penalty.

The Perkins Loan is another federal loan option. It is offered to students with exceptional monetary need. One benefit of this loan is its low interest rate. Like the Stafford Loan, it has a generous grace period.

The PLUS loan program has two loans: one available to parents of undergraduate students and one available to graduate students. It is based on income and the family’s ability to contribute to the student’s education. This loan allows parents or graduate students to fund the entire cost of the education at a fairly low interest rate.

Private loans vary almost as much as the lenders that offer them. Some will depend on your credit score, which can be a challenge since most college students do not have much of a credit history. One commonly used loan is the Signature Student Loan. This one offers a competitive interest rate that is based on credit history. You can use a cosigner, such as a parent, to help boost your creditworthiness for this loan. Many students use this loan to cover the cost of their education that is not covered by federal loans and grants.

If you are looking to go to a technical or trade school, you may be eligible for the Career Training Loan offered by Sallie Mae. This loan is offered to borrowers based on credit history, and it can be used towards non-traditional educations, including online courses. This loan can be used for non-tuition education expenses as well as the actual cost of classes. It has no prepayment penalty and offers several flexible repayment terms.

Remember, explore all of your options when looking for a way to pay for school. There are many private loan options out there, but you will have to dig to find some of them. Make sure to read the repayment terms, and look for a student loan that will give you a little time after graduation to look for a job before you have to start repaying what you owe.

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