The federal government is the largest source of education loans. The two primary federal programs (both of which have the same lending terms) are:
Federal Perkins Loans
are fixed 5% interest rate loans for students with exceptional financial need. Perkins loans are funded by the federal government and administered by the college.
Federal Stafford Loans
(subsidized and unsubsidized) are low-interest rate loans for students attending college at least half-time. There are two types:
- Subsidized. You can qualify for subsidized Stafford loans if you can demonstrate financial need. The federal government will pay the interest on the loan while your student is in school.
- Unsubsidized. You can get an unsubsidized Stafford loan regardless of your family's income. You are responsible for all accrued interest, but you do not have to make payments until you graduate or leave school. If you don't qualify for the full, subsidized Stafford loan amount, you can get an unsubsidized Stafford loan for the balance, up to the federal Stafford limit
Federal PLUS loans
(Parent Loan for Undergraduate Students) allow parents to borrow for each dependent undergraduate student who is enrolled in college at least half-time. Parents can borrow up to the full cost of their student's education each academic year, less grants and other financial aid the student receives. Important: PLUS borrowers usually start making payments within 60 days after being given the money.
Institutional loans are available from the colleges and universities themselves. The colleges determine loan characteristics and eligibility requirements.
Private loans are available to students from banks and other organizations, which determine loan characteristics and eligibility requirements.
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