If you’re in the planning stages of enrolling in a college, one of the more significant decisions likely to be made relates to applying for the right student loan. There is a range of choices when it comes to the availability of the student loans. If you can be more mindful of the differences between the various types of loans, it’ll be a far-sight easier to choose the right one to match your specific circumstances.
Federal and private loans
In the process of researching the availability of the student loans you are likely to discover that they are categorized into two specific groups, which relates to private and federal loans.
Private Loans: Private loans are offered by the independent financial institutes, such as the banks. Interest rates are likely to be higher than what you would expect with federal student loans. The application process for the private loans is very strict and the ability to apply for one of these loans will be heavily influenced by having an acceptable level of income and a good credit rating.
Federal Loans: Provided and maintained by the federal government, federal student loans are very often found to attract much more favorable fees, interest rates, and maximum amount of aid you are able to receive. Banks are involved in the funding of certain federal loans, but the terms and conditions of the loan stay in the control of the federal government.
The main types of federal loans are split into the following categories:
The most common of the federal backed student loans which is based on financial need is the Stafford loans; they are unsubsidized or subsidized.
If you are a student that clearly illustrates exceptional financial requirements, the Perkins loans are administrated by the college and offer very low-interest rates.
PLUS loans are ideal for those that want help with covering expenses that aren’t able to be covered by other forms of federal aid. It is possible for either the graduate student or the parents of a dependent student to take out this loan type.
Also, you have the option of the institutional loans which is a loan option provided by the college to their students, and is non-federal aid.
In order to successfully apply for the various federal student loans it is necessary to first get and complete the Federal Application for Student Aid form. Once the loan application form has been submitted it is just a case of waiting to see whether you had been successful in applying for the type of financial aid you are requesting.