1. Education
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Types of Education Loans

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Many students pay for graduate school through federal loans. Federal loans, such as the Stafford and Federal Perkins loan, have low interest rates, deferment options, and do not require a credit check. In order to get a Stafford or Federal Perkins loan, you must complete the FAFSA form annually and must sign a promissory note, which is a legal document stating that you agree to repay your loan based on the terms of the note. Submit your FAFSA as early as possible to ensure that you will receive an adequate amount of aid.

Stafford Loan:

Eligibility:

  • be a U.S. citizen or eligible non-citizen
  • have a high school diploma or GED certification
  • not be in default on any other student loans
  • be enrolled at least half time in an accredited degree program
  • Undergraduate, Graduate, or Professional student

Facts:

  • Provided directly by the government (Federal Direct Student Loan Program (FDSLP)) or through banks, credit unions, or savings and loan associations (Federal Family Education Loan Program (FFELP)).
  • Option to choose a subsidized or unsubsidized loan.
  • Subsidized loans are based on financial need. The interest is paid by the government during your time in school, for the first six months after you leave school, and, if you qualify, to have your payments deferred.
  • In an unsubsidized loan, you must pay the interest from the time you are awarded the loan but you can have the payments deferred until after graduation, which lets you accumulate and capitalize the interest (adding the interest amount to your loan balance). All students are eligible for an unsubsidized loan regardless of financial need.
  • Some students have the option to combine unsubsidized and subsidized loans.
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  • The amount awarded is based on your class standing and dependency status.
  • There is a 4% fee, which is deducted from the amount of money awarded.
  • Loans will be distributed by your school in two installments and remaining funds can be either set aside or given to you in a form of a check.
  • You must repay your loan starting 6 months after you finish school or if you drop below half-time. You will have 10-30 years to repay the loan based on the amount and plan received.

Federal Perkins Loan:

Eligibility:

  • be a U.S. citizen or eligible non-citizen
  • have a high school diploma or GED certification
  • not be in default on any other student loans
  • be enrolled at least half time in an accredited degree program
  • Undergraduate or Graduate students

Facts:

  • Provided by your school, which receives the funds through the government.
  • It’s a subsidized loan, in which the government pays the interest while you are in school.
  • There are no fees.
  • The interest rate is 5%.
  • Undergraduate students are awarded up to $4,000 yearly and graduate students are awarded up to $6,000 yearly.
  • The amount awarded is based on financial need, other aid received, and available funds at the school.
  • Each school is provided with a certain amount of money to award yearly and, thus, funds can be insufficient. It is recommended that you submit your FAFSA as early as possible to receive that amount of funds necessary.
  • The school will pay you directly through a check or credit your account. You will receive 2 payments per year.
  • You will have 10 years to repay your loan based on the amount received.

Private Loans:

    Undergraduate, graduate, and professional students have the option to take out loans through private sources of funding, such as a bank. You do not need to submit the FAFSA for a private loan but you do have to apply through the private organization. Different types of loans are provided based on your level of education. However, private loans are more expensive than government loans. Only turn to private loans if necessary.

Consolidated Loans:

    Consolidated loans offer students the opportunity to combine all the different federal loans received into one big loan with one monthly payment. The advantage of a consolidated loan is that you can take longer to repay your loan and have lower monthly payments. The Federal Perkins and Stafford Loans are eligible for consolidation. To get a consolidated loan, you need to contact the appropriate department of the lender for an application. You can apply for a consolidated loan during your grace period or once you begin repayment. The interest on a consolidated loan never exceeds 8.25% and is a fixed rate.

Because there are limited scholarships, fellowships, grants, and assistantships, all students are encouraged to apply for a loan. Loans can help pay for school, living expenses, textbooks, and other day to day things. Loans can limit the amount of stress involved in finding ways to pay for school.

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