Loans for college

If you need money for college even after you have received all the grants and scholarships you can, then it is time you should consider getting a loan to pay for your college. With two options to choose from it can be difficult to figure out if federal loans or private loans are better.

Benefits of federal loans

Federal loans should always be looked at first when you are considering a loan for college. Federal loans are the largest source for educational loans and they also have the longest terms with lowest interest rates. Federal loans are usually designed specifically for students who need money to pay for their college education. Some of the main benefits you get with a federal loan that you don't get with a private loan include lower interest rates, options to postpone payments, longer repayment terms and easier credit requirements.

Types of federal loans

Many federal loans are needs based such as the Federal Perkins Loan and the Subsidized Federal Stafford Loan. However, other loans are not and require you to fill out the FAFSA application first for college loans.

The Federal Perkins Loan

Students with exceptional financial needs are often offered the Federal Perkins Loan. This loan has a low interest rate and is based on the information students give in their FAFSA.

The Federal Stafford Loan

Most undergraduate and graduate students go with the Federal Stafford Loan. Depending on the student's year in school and whether they prove themselves financially dependent or independent will effect the amount of loan they receive. Your eligibility for this loan is determined by the college's financial aid office. A students financial needs determines whether they are eligible for subsidized or unsubsidized Stafford loans.
The other option if for the Federal PLUS Loan which is a low interest loan offered to the parents of students. Every year the parent is allowed to borrow the amount a student needs for attendance minus the amount they receive from other financial aid services. A credit check is required to get a Federal PLUS Loan but it is not based on financial need.