Many students require financial assistance to attend college, but not everyone qualifies for scholarships and grants. Luckily, there are many types of college loans available, with options for every student. Some college loans are based on financial need, some are government loans available to all, some require a good credit history and can be acquired through private lending sources, and some are available specifically for parents of college students. The most common types of loans are:
Stafford Loans are either Federal Family Education Loans (FFELs) or William D. Ford Federal Direct Loans (Direct Loans). College loans in the Stafford family are for students. Direct Loans are funded by the government and FFELs are funded by banks and other private lenders. The choice of FFEL or Direct is up to the school, not the student. However, both programs are virtually identical as far as eligibility and amounts available, but the repayment terms may differ.
Stafford Loans are offered after a student completes the Free Application for Federal Student Aid (FAFSA). Information is transmitted to each school selected, then the school puts together a financial aid package that includes the type and amount of loans a student is eligible for. These loans are either subsidized or unsubsidized, depending on financial need. If a loan is subsidized, the federal government pays the interest while the student is enrolled at least half-time in college or is in a deferment or grace period.
PLUS Loans are also either Direct Loans or FEFLs, but they can be borrowed by parents of dependent students. Borrowers must have an acceptable credit history. Direct PLUS Loan applications are given out by a school's financial aid office. FEFL PLUS Loan applications are given out by a school's financial aid office, as well as by private lenders. PLUS loans are always unsubsidized. Though PLUS Loans have historically been known as "parent" loans, they are now also available to graduate and professional students with the same terms as the parent loans.
Federal Perkins Loans
Federal Perkins Loans are available at some, but not all, colleges. Eligibility is based on financial need, and each individual school determines how funds are to be allocated. Perkins loans may be given to both undergraduate and graduate students. There is no credit history requirement and loans are repaid directly to the college.
Private Lender Loans
When government college loans aren't enough to pay the full cost of attending school, private loans are available. There is a credit history requirement, but most loan programs allow a co-signer if the student does not qualify. For students who are interested in vocational programs that do not receive the same types of aid as traditional colleges, private college loans can make up the difference and allow the student to pursue the program of his or her choice.