We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Education

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What are the Different Types of Student Loans for College?

By Josie Myers
Updated: May 16, 2024
Views: 4,528
Share

Those seeking student loans for college have two basic options, federal or private loans. Federal loans are guaranteed by the federal government, and therefore generally offer the best interest rates and repayment options. Private loans are granted by private banks, and usually have a bit higher interest rates than federal loans. They are popular, however, for providing additional funds when federal loan limits are reached.

There are four types of federal student loans for college. Stafford loans are the most popular, followed by Perkins, and two types of PLUS loans. Each has have their own purpose.

Stafford loans offer a low, fixed interest rate for undergraduate students. The school being attended must be accredited, and the student must be enrolled at least half time. There are limits to the amount that can be borrowed, raging from $5,500 US Dollars (USD) for first year dependent students to $20,500 USD for independent graduate students.

Federal Perkins loans are very low interest student loans intended for students with financial difficulties defined as "exceptional." Students must apply for the loans with special documentation for their personal or family financial difficulties. Yearly loan limits range from $3,500 USD for first year student to $8,500 USD for graduate students.

PLUS loans were originally called Parent Loan for Undergraduate Students, but have since dropped that name. These loans are low interest loans taken out by parents for their dependent students to cover additional educational costs above those covered by the Stafford and Perkins loans. The loans are able to fund the entire cost of education beyond what the other types of loans will cover. Graduate PLUS loans are taken out by a graduate student to pay for their own education in a similar manner.

Private Loans are another option for those seeking student loans for college. These loans are also sometimes called alternative student loans, or personal student loans. The interest rates of these loans, while usually higher than a federal loan, are generally lower than other lines of credit issued by private banks. Some students choose these types of loans to pay for books and other similar expenses associated with school.

Repayment begins six months after graduation on most student loans for college. For those who are having difficulty finding gainful employment, there are options like forbearance or deferment that can put off payments. Many find it helpful to consolidate their loans into one lump sum, since it can lower the interest rate, and extend the repayment terms of the loan in many cases.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
By beachgirl05 — On Jul 09, 2010

allienoelle- All Stafford student loans are either subsidized or unsubsidized.

Subsidized means that the government pays the interest of the loan while you are in school.

Unsubsidized means that you must pay the interest, but you can choose to defer interest payments until after you graduate if you wish.

Keep in mind that to be eligible to receive a subsidized loan, you must demonstrate considerable financial need. To determine financial need, you must fill out a FAFSA -- Free Application for Federal Student Aid.

By allienoelle — On Jul 09, 2010

What is the difference between a subsidized and an unsubsidized Stafford student loan?

Share
https://www.wisegeek.net/what-are-the-different-types-of-student-loans-for-college.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.