If you are considering entering college in the near future you should be aware of the many different types of government and federal student loans. While many colleges do offer free student loan scholarships and there are various types of need-based financial aid and grants available; loans still make up the major portion of funding for the cost of education for most college students. Private student loans are also available; however the advantages of federal student loans usually far outweigh any benefits of private student loans; if you qualify to receive them.
Private college loans are credit based and may involve a co-signer from the students parent. You must qualify to receive a private student loan even though the loan program features are quite attractive. The National Student Loan Center or the NSLC offers many private low cost low rate college student loan programs. The NSLC also offers private as well as government student loans. An especially attractive student loan program offered by the NSLC, is the NSLC PLUS loan program; which gives parents of students the option to borrow up to 100% of their child’s cost of education. This is nice because the cost of higher education institutions is blasting through the roof every year! Armed with this type of higher education financing, a college student can fund everything from room and board to books and just have to concentrate on studies.
Government and federal student loans allow college loans without a cosigner. They are non credit based student loans. Credit is not even looked at under federal college loan programs for students. Their will always be a student loan lien on the students credit until the college loan is finally paid.
One of the most common government and federal student loans is the Perkins loan. It comes with a low interest rate of only 5% and is awarded to both undergraduate and graduate students. There are no origination fees charged for this loan and it is paid back to the school because loan funds are issued directly from the school to the student from monies provided by the government. Take a look at the following facts regarding the Perkins Loan:
- Need based loan; only those students with exception financial need will qualify
- Able to borrow up to $4,000 for each year of undergraduate study and $6,000 for each year of graduate study.
- Loan limits are $20,000 for two years of undergraduate study and $40,000 for graduate school.
FFELP (Federal Family Education Loan Program)
This is also another common loan and features both subsidized and unsubsidized student loans. The difference between the two is that the government will pay for the interest of the student loan while the student is in school and during the grace period of a subsidized student loan while the student is responsible for the interest in an unsubsidized student loan. Additionally, students must display a financial need to qualify for a subsidized student loan while the unsubsidized student loan is non need based.
Federal Parent Loan for Undergraduate Students (PLUS)
This type of student loan is available to parents and guardians of dependent undergraduate students. Borrowers do not need to demonstrate financial need and may borrow up to the cost of attendance; minus any amount of financial aid that may be received. Loan funds are first applied to tuition and fees. This type of government and federal student loan has a variable interest rate.