Student Loans: What You Need to Know

Who doesn’t want to be debt free. But sometimes, we don’t have enough so we need to rely on loans to help us.

Student loans are broken into two categories, federal and private. Federal loans are available for both students and parents, and have uniform rates and requirements. Private student loans are borrowed from lending agencies, with credit requirements, interest rates, and repayment schedules set by the lenders.

Direct Subsidized Loans

– Direct Subsidized Loans are available to undergraduate students with financial need.
– Colleges determine the amount you can borrow.
– The amount borrowed may not exceed your financial need.
– The U.S. Department of Education pays the interest on a Direct Subsidized Loan

Direct Unsubsidized Loans

– Direct Unsubsidized Loans are available to undergraduate and graduate students.
– There is no requirement to demonstrate financial need.
– Colleges determine the amount you can borrow based on your cost of attendance and the other financial aid you receive.
– You are responsible for making interest payments during all periods.
– If you do not pay interest during these periods your interest will accumulate and be added to the principal amount of your loan.

Federal Perkins Loans

– Federal Perkins Loans are available to undergraduate, graduate, and professional students with exceptional financial need.
– The interest rate for this loan is 5%.
– Not all schools participate in the Federal Perkins Loan Program. Check with your school’s financial aid office to see if your school participates.
– Your school is the lender. Payments go to your school, or your school’s loan servicer.
– Funds depend on financial need and availability.

 Direct PLUS Loans

– Direct PLUS Loans are provided by The U.S. Department of Education.
– The borrower cannot have an adverse credit history.
– The maximum loan amount is calculated by the cost of attendance minus other financial aid received.

Private Student Loans

– Private Student Loans are offered by different private lenders.
– Different lenders have different requirements, rates, and repayment schedules.
– Applications are typically available online, through your lender, or from your school’s financial aid office.

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