What Are the Different Types of Student Loans?

T Thompson

There are many types of student loans to choose from, and it's important to find one that is right for your particular situation. The two main types of loans are federal loans and private loans.

Students should apply for loans before they begin classes.
Students should apply for loans before they begin classes.

There are three main types of federal loans:

Repayment on student loans generally begins shortly after graduation.
Repayment on student loans generally begins shortly after graduation.

Federal Stafford Loans - These are awarded based on financial need and are regulated by the federal government. They can be obtained from a bank, credit union, or directly from the government. There are three kinds of Federal Stafford Loans to choose from:

A Federal Plus Loan is awarded to a person based on their credit history.
A Federal Plus Loan is awarded to a person based on their credit history.

Subsidized Federal Stafford Loan - This loan is long-term and need-based, with a low-interest rate. The term "subsidized" means that the government will pay the interest on the loan while a student is in school or when the student requests a grace period or deferment.

Unsubsidized Stafford Loan - This loan is long-term, non-need-based, with a low-interest rate. This type of loan is best for students who don't qualify for other types of financial aid, or who still need more money in addition to other forms of financial aid. Almost all household incomes qualify, and "unsubsidized" means that the interest on the loan is the responsibility of the borrower. In some cases, however, payments can be postponed.

Additional Unsubsidized Stafford Loan - These loans are reserved for borrowers that are classified as independent students, as determined by Federal guidelines.

Federal Plus Loans - These loans are available to parents whose children are attending college as full or half-time undergraduate students. They are awarded based on credit history and cost of attendance. The interest is low on this type of loan, but repayment usually begins within 60-90 days after full disbursement of the loan, or after the student graduates.

Federal Perkins Loans - Perkins loans are awarded to students based on extreme financial need, and usually have very low interest rates. The total funds available to be disbursed for these loans is limited, however, which means that the amount of the loan will likely be relatively low. The interest doesn't start to accrue until 9 months after a student drops below half-time enrollment or graduates. If you're not sure if you qualify for a Perkins Loan, ask a college financial aid advisor. One important thing to note about these loans: they are reported to a credit bureau, which means that if you are late on payments, or default on your loan, it could damage your credit.

If you don't qualify for federal loans, then you might consider looking at private lenders. Banks and loan companies often provide student loans at relatively low interest rates. Each institution is different, so be sure to check out the terms and conditions of any loan you obtain, federal or private, and make sure you know the details before signing on the dotted line.

Student loans may cover the costs of necessary supplies.
Student loans may cover the costs of necessary supplies.

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Discussion Comments


What does the notation DLSUBCONS mean on my student loan statement?


Planning ahead for Federal Stafford Loans is totally vital. You will always find last minute options (debit card advances, pay day loans), but the simplest way is to sort everything before hand. The main thing is to avoid agents/brokers - they're always overly expensive.


Hello, Back in 1992 I went to college, took out a student loan, got really sick, and a few years later my loan was medically discharged. Ten years later my health started to improve, and a few years later I went back to school, took out another (and was approved for) another student loan, in 2005, went to school for a year and a half, my husband got in a car accident and died, so I had to put school on hold, and work full time (have two kids) and have made every student loan payment that has been due, I am current with it.

I have now decided to go back to school, applied to a different, college, not too far away from the last one, and the first time I went in there, the clerk/employee there, said that something looked strange on my report for financial aid, but after explaining everything, she said there should no problem for me to get another loan, since I was given one in 2005 and have been current on it. A few weeks later, I went in and a different person, said, that I would not be able to take out another student loan because of the first one I had that was discharged, even though I was offered one in 2006 and turned it down that year, and was given one in 2005. This doesn't make sense to me why I got one in 2005, was offered another in 2006, why now I would not be able to get one. Do the schools themselves have any influence on who receives it, or do they have their own policies that can effect who receives a federal student loan? Any suggestions?


If you can avoid private loans, I highly recommend it. While you do want the comfort of being able to completely focus on your studies (which extra cash helps you do!), you need to also balance that against the stress you'll be under once you rack up lots of debt and that all-to-short deferment period is up!

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