If you need guidance as to what the various types of student loans entail, Fairbanks Banking Rates describes some of the more common types of student loans to help make your decision easier:
Subsidized and Unsubsidized Federal Stafford Loans
- Subsidized Stafford Loans are specifically for students that demonstrate financial need. “Subsidized” means the government will pay the interest on the loan while the student is in school. The loan is long-term and offers low interest rates.
- Unsubsidized Stafford Loans are also available to students without a financial need. The interest payments are the responsibility of the borrower.
Federal Perkins and Federal Plus Loans
- Federal Plus Loans: Parents of half- to full-time undergraduate students may obtain this type of federal student loan. They are awarded based on the cost of attendance and their credit history. Parents may only obtain this loan to pay for the educational needs of a dependent student.
- Federal Perkins Loan: These loans are for students with an extreme financial need. This is why the interest rates are very low for Perkins loans. However, there is a limited amount of funding available to be awarded, resulting in generally small loan amounts.
Student Loans from Private Lenders
- These types of loans are commonly referred to as “alternative college loan financing.” They are funded by private lenders, such as banks, rather than the federal government. Private student loans are considered to be an option for students and parents who have exhausted all of their efforts in receiving federal assistance.
