A quick education on federal student loans.
Federal student loans include Federal Stafford (Unsubsidized & Subsidized), Parent PLUS, Graduate PLUS, and Consolidation Loans.
Unlike Private and Alternative student loans, Federal student loans are provided through the U.S. Department of Education's Direct Loan Program. Find out how each loan type may be beneficial to you.
If scholarships & grants don't cover your expenses, a Stafford Loan might be a good fit.
Stafford loans allow students to borrow money for school using a low, fixed rate. These loans are provided by the U.S. Department of Education's Direct Loan Program. There are two types of Stafford loans — Subsidized and Unsubsidized.
- Subsidized Stafford loans are based on financial need and the interest on these loans is paid by the government while the student is enrolled in school at least half-time.
- Unsubsidized Stafford loans are available to students regardless of need, however interest accrues after the loan disburses and is capitalized (added to the loan balance) once repayment begins or once the borrower falls below half-time enrollment status.
Covering additional college costs, PLUS loans may be a good choice.
PLUS Loans allow parents and graduate students to borrow money up to the cost of education, minus any financial aid. These loans are also offered at a low, fixed rate of interest and financial need isn't an issue, but credit guidelines apply in determining eligibility. There are two types of PLUS loans — Parent PLUS and Graduate PLUS.
- Parent PLUS loans allow parents to borrow money to finance their child's education. Unlike Stafford loans, Parent PLUS loans go into repayment 60 days after loan funds are fully disbursed to the school; however, parents may choose to defer payments until six months after the student graduates or drops below half-time status.
- Graduate PLUS loans allow graduate or professional students to borrow money to finance their education. These loans come with flexible repayment terms, allowing borrowers to defer payments while enrolled in school at least half-time.
Combining all your loans into one may be a good option.
Federal Consolidation loans let borrowers combine separate federal student loans into one loan, which can help stretch out the repayment period — and eliminate the hassle of making several payments each month. Also, since the repayment period has been extended, monthly payments are typically lowered. However, by extending the term of the loan, the borrower ends up paying more in interest. Consolidation loans are handled directly by the government.
If you need more details about Federal Stafford or PLUS loans visit the U.S. Department of Education Web site.