There are many types of student loans. Some of the most popular are Federal Stafford Student Loans, Federal PLUS (parent loan), and alternative or private loans. These loans make great alternatives to depleting their savings, using current income or borrowing against their home equity when grants and scholarships do not cover all costs. If you've already graduated, combine multiple payments into one with a consolidation loan.
Alternatively, if you are studying to become, or are currently working as, a primary care health professional, competitive loan repayment and scholarship programs are available through the National Health Service Corps.
The Federal Undergraduate Stafford Loan is a simple interest, government guaranteed, no collateral loan. The interest rate is a fixed rate of 6.8%. Students may borrow while in school and begin repayment six months after leaving school or graduating.
Subsidized vs. Unsubsidized
Depending on your level of financial need, you may be eligible to borrow a "Subsidized" or an "Unsubsidized" Stafford Loan, and in some cases, both. With Subsidized Stafford Loans, the government pays the interest that accrues on the loan while you are enrolled, during your six-month grace period, and during deferment.
The Federal Graduate Stafford Loan is the same as the undergraduate loan, except that graduate students may borrow up to $18,500.00. This number goes even higher for medical loans.
The Federal PLUS is a simple interest, government guaranteed, no collateral loan. The fixed interest rate is 8.5%. Parents may be eligible to borrow up to the total cost of education less all financial aid received. This total cost can include tuition and fees, room and meals, books and supplies, transportation, and more.
Parents are eligible for the PLUS if they meet the minimum government credit requirements. Parents begin repayment 30 days after the final disbursement for the academic year. The PLUS is based on a ten-year repayment plan with no prepayment penalties. The following are examples of monthly payments based on the total amount borrowed.
There are a number of additional loan types available. Regardless of the type you currently have, student loan consolidation can help you reduce your payment amounts and payment structure. Ask your financial adviser about Student Loan Consolidation.
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