| Vanessa McHooley | | | | eligible for. Subsidized loans are based on financial |
| Federal Student Loans versus Private Student Loans | | | | need. The government pays the interest while the |
| - which is best for me? | | | | student is in school, in deferment, and in their grace |
| You have gotten all the grants and scholarships you | | | | period. |
| can, but you still need money for your education. It's | | | | Unsubsidized loans are available to all students, |
| time to look at loans. But which is better - federal | | | | regardless of income. The student is responsible for |
| loans or private loans? | | | | all interest. |
| Federal loans | | | | Federal PLUS Loan |
| If you need to take out a loan to help pay for your | | | | The Federal PLUS Loan (Parent Loan for |
| education, you should always look at federal loans | | | | Undergraduate Students) is a low-interest education |
| first. The largest source of education loans around, | | | | loan for parents. Each year, parents can borrow up |
| federal loans are long-term loans with low interest | | | | to the cost of attendance, minus other financial aid |
| rates designed for students who need money for | | | | received (scholarships, grants, student loans, etc.). |
| their educations. They have several benefits when | | | | The PLUS loan is not based on financial need. Qualified |
| compared to other borrowing options, including | | | | applicants must pass a credit check. |
| - Lower interest rates | | | | Private loans |
| - Options to postpone payments | | | | Private loans are designed to supplement federal loan |
| - Longer repayment terms | | | | programs and are available from schools, banks, and |
| - Easier credit requirements | | | | education loan organizations. They are usually used to |
| Eligibility for some of these loans, such as the Federal | | | | cover education costs that cannot be met by federal |
| Perkins Loan and the Subsidized Federal Stafford | | | | aid. |
| Loan, are needs-based, while others are not. You will | | | | Terms for these loans vary according to the lender |
| need to complete a FAFSA to apply for these loans. | | | | and your credit history. Keep these things in mind as |
| The most common federal student loans are listed | | | | you consider taking out a private loan: |
| below: | | | | - Private loans have credit requirements, and you |
| Federal Perkins Loan | | | | may need a co-signer |
| The Federal Perkins Loan is a low-interest loan | | | | - The lender determines the interest rates and fees, |
| available to students who have exceptional financial | | | | which may be affected by your credit score |
| need, based on the information provided on their | | | | - Private loans may not offer deferment options |
| FAFSA. Undergraduates can borrow up to $4,000 per | | | | - Private loan programs may offer borrower benefits, |
| year, while graduate students can borrow up to | | | | such as interest rate discounts or rebates |
| $6,000 per year. | | | | No matter what type of loan you take out, be |
| Federal Stafford Loan | | | | conservative and borrow wisely! All loans have to be |
| The Federal Stafford Loan is available to | | | | repaid, whether federal or private. |
| undergraduates and graduate students. Loan amounts | | | | This article is distributed by NextStudent. At |
| depend on a student's year in school and whether | | | | NextStudent, we believe that getting an education is |
| they are financially dependent or independent. Your | | | | the best investment you can make, and we're |
| college's financial aid office determines your eligibility. | | | | dedicated to helping you pursue your education |
| Stafford loans can be subsidized or unsubsidized. | | | | dreams by making college funding as easy as |
| Financial need determines which type a student is | | | | possible. |