Loans

Federal Student Loans

After exhausting scholarship and grant options, many students rely on federal student loans to help finance their educations. These loans are guaranteed by the federal government and have lower interest rates than private loans. And, unlike private loans, they never require credit checks, collateral or co-signers. Federal student loans include the Federal Stafford, Graduate Plus and Federal Perkins Loans. All Stafford Loans are either subsidized (the government pays the interest while you're in school) or unsubsidized (you pay all the interest, although it can be accrued, with the payments deferred until after graduation). Eligibility for subsidized loans is determined by a financial needs test. There is no needs test for eligibility for unsubsidized loans, although the amount for which you might be eligible is determined in part by the expected financial contribution from your family.

Repayment of federal student loans usually begins six months after graduation. There are a variety of options available to the borrower to help with the repayment process, such as extended repayment terms and forbearance/deferment options.

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Private Student Loans

Some families turn to private lenders when the federal loans don't provide enough funding for post secondary education. Various financial institutions offer private student loans without any financial backing from the federal government. These loans are not subsidized, meaning that interest starts to accrue at the time the loan is made. There are many different types of private loans, each program with its own rules and requirements. Eligibility for private student loans often depends on your credit worthiness, which can be significantly improved by having a creditworthy co-signer. Private loans are also called private-label or alternative loans.

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