Here is a brief discussion on the different kinds of student loans:
Subsidized Stafford Loan- Both undergraduate and graduate students can avail of this loan. A subsidized Stafford Loan means there are no payments required to be made until six months after the student ceases to be at least a halftime student. It is the responsibility of the federal government to pay the loan interest as long as the student is in the school at least half time. Interest does not accrue and payments do not begin until a six-month "grace" period transpires after the student leaves school. To avail of this loan, the student has to show a need for the fund by filing the FAFSA application.
Unsubsidized Stafford Loan- Both undergraduate and graduate students are eligible for this loan. However, unlike the subsidized Stafford Loan the students will have to pay the loan interest while they are still in school. Also it is not a needs based loan, so the students dont have to show any need for the fund. A student can choose to pay the interest or allow it to accrue and be capitalized (that is added to the principal amount of the loan).
Federal Perkins Loans Both undergraduate and graduate students are eligible for this loan. The student needs to show a financial need to avail of this loan. In this type of loan, the funds are given out by the school and hence it must be repaid to the school.
Federal PLUS Loans for Parents In this type of loan, parents are allowed to borrow up to 100% of their childs cost of education. Parents can avail of this loan irrespective of their income and without showing any need for the fund.
As much as the debt burden is a concern for the students- This type of loan has a variable interest rate and is eligible for dependent undergraduate students alone. These are first applied to tuition and fee. The student doesnt have to show any financial need.
Federal Consolidation Loans In this type of loan, borrower has the advantage of monthly payments and lower interest rates. The loan availed from different sources are clubbed together into a single loan with one repayment plan.
Federal Nursing Loans- This type of loan is available to the students of nursing schools. The borrower has the advantage of flexible repayment options. Cancellation of loans is at times allowed.
Federal Insured Student Loans - This loan is meant for those students who are not eligible for the other student loans.
Health Professions Student Loans This loan is meant for students pursuing courses in the fields of dentistry, optometry, pharmacy, veterinary medicine or podiatry. These are long term loans with low interest rates.
Private Student Loans In this type of loan, the credit worthiness of the borrower is taken into account. Unlike federal student loans, private loans aren\'t guaranteed by the federal government. While guaranteed student loans carry a fixed rate of 6.8%, there are no limits on the interest rates and fees private lenders can charge.
