What are different types of college student loans available?
What are different types of college student loans?
Students should understand before applying for school loans that the student loans have to be paid back eventually. They are unlike grants or scholarship money that doesn’t need to be returned at all. Almost all the payments have to be done either right after or within few months period of graduation from the college or university. That’s when the interest rates charges on the loan principle amount begin most of the time. Some loans do give students the option to start making payments, which can even be for the interest rate, while in the school. Student loans can be broadly divided into five different types; and they are Federal loans, Private loans, Campus based loans, Alternative student loans (such as alumni organization) and International student loans. But all these three kinds of student loan can be further sub-divided into more specific ones.
Federal student loans are guaranteed by government and usually charge interest rates lower than any other types. There are mainly four different types of government federal student loans: Stafford loans, Perkins loans, Parent PLUS loans and Graduate PLUS loans. Federal loans are recommended as the first source of financial aid for college once it has been realized that the federal and state grants aren’t enough to cover the student’s college expenses such as tuitions, fees, books, etc.
Of course there are subsidized and non subsidized loans. Remember only few loans are the kind which doesn’t require you to pay the interest rates for the loan money while you are in school. This kind of loan is called subsidized loan; the interest rates on the loans are subsidized while going to college. Unsubsidized loans charges interest rate since the day it gets disbursed to your college financial account.
Private student loans are the ones that students can borrow from private entities such as banks, credit union companies and other private for-profit lenders. These lending groups charge interest rates much higher than government does on federal student loans. And often times, the private student loans are harder to get since it requires students to go through eligibility process such as credit score, co signers, and type of student.
Some people will also divided college students loans into Guaranteed student loans and Direct school loans. Guaranteed student loans are same as Stafford loans, whereas Direct school loans are ones that is distributed by lenders through a school that the student is attending.