Student Loans: What’s the Difference?
Student Loans: What’s the difference?
I think I’ve mentioned before that I’m a recent college graduate. I finished my Master’s Degree in July. Six and a half years of loans is not a fun thing to have to go through. Navigating the waters of what loans to get and what to avoid, and how best to fund your education. In the coming weeks, I will also share with you some other hints and tips for funding your education, like applying for grants and scholarships and how best to save for it.
Federal Loans: There are two types of Federal loans that someone can receive as a part of their financial aid package. All of these loans require a student to be enrolled at least half-time to be considered.
- Stafford Loans- As long as you fill out the FASFA, you are eligible for at least some Stafford Loans. There are two types of Stafford loans, and the type that you receive in your package is based on your financial need. Unsubsidized Stafford Loans are loans that begin accruing interest as soon as the loan is taken out. Subsidized Stafford Loans are loans that do not begin accruing interest until you start paying your loans back after you graduate.
- Perkins Loans – these are need-based loans that the federal government provides. There is a certain amount of money allocated to each institution yearly by 3 sources: Federal Capital Contributions (FCC) and loan cancellations; funds that are matched by the university you or your student is attending (valuing at least one third of the allocation provided by the government); and the school’s collection of fees and interest from other loans. The best thing about Perkins Loans is that they are low-interest; even lower than the Stafford Loans. It’s the most inexpensive and flexible loan out there, but you have to keep a (insert here) GPA and meet a certain socioeconomic level in order to be eligible.
Parent Loans- The most popular and well known parent loan is the Parent Loan for Undergraduate Students, or the PLUS loan. These loans are an option only if their financial aid package does not fully cover their tuition. The interest rate is still decent (currently it is 7.9%), but, unlike the Stafford and Perkins loans, it is highly dependent on a parent’s credit score.
Private Loans: Private loans are another matter entirely. Almost every financial institution offers some sort of student loan, including the ones you may get your Stafford and PLUS loans through. Unfortunately, these all accrue interest even while you’re in school, some don’t have grace periods after graduation, and their interest rates are higher.
There are too many institutions and options to list here, but you can get more advice on this and other student loan information at www.finaid.org.
0 Comments
Trackbacks/Pingbacks