You have probably heard about student loans but how much do you really know about how the loan system works? Here’s a quick primer on the different types of loans. When it comes to loans you always want to borrow federal loans before taking private loans. Federal loans are most often more available, cheaper, and have better interest rates and repayment terms than other private loans you might get from your bank or credit union. For more information on loans you can check out; https://studentaid.ed.gov/sa/types/loans
Federal Perkins Loans
Undergraduate students: loans up to $5,500
Graduate students: loans up to $8,000
Your college is the lender
Direct Subsidized Loans
For undergraduate and graduate students: must be enrolled at least half time
Loans up to $5,500 depending on grade level and dependency status
Department of Education is the lender
No interest charged while you are enrolled in school.
Direct Unsubsidized Loan
For undergraduate and graduate students: must be enrolled at least half time
Loans up to $20,500 minus subsided loan amount, depending on grade level and dependency status
Department of Education is the lender
The student is responsible for interest and it accrues while you are enrolled in school.
Direct PLUS Loan for Parents
For parents of dependent students: must be enrolled at least half time
Loan amount is the maximum cost of attendance, less other financial aid.
Department of Education is the lender
The parent is responsible for interest and it accrues while you are enrolled in school.
Direct PLUS Loan for Graduate or Professional Students
For graduate and professional students: must be enrolled at least half time
Loan amount is the maximum cost of attendance, less other financial aid.
Department of Education is the lender
The student is responsible for interest and it accrues while you are enrolled in school.
Private / Alternative Loans
More expensive than federal loans.
Eligibility, interest rates, and fees are based on the credit score of the person taking out the loan (student or parent)
Your bank or credit union is the lender.
