Federal loans are the best bet

Undergraduate students usually rely on federally funded loan programs in order to be financially able to attend a college or university. The best feature of these loans are that they are usually at a manageable interest rate and do not require that the student or the student's family have an excellent credit history. Furthermore, these federal loans often offer numerous payment and deferment options for the student to take advantage of after graduation. The two federally funded programs that most students utilize is the Stafford Loan and the Perkins Loan.

The Stafford Loan

The Stafford Loan has two main types of loans available for undergraduates. The first form is a subsidized loan, which means the government will pay the interest on the loan as long as you are attending college. An unsubsidized loan is the type where the student is responsible for paying back the interest on the loan. Subsidized loans are rewarded based on financial need while unsubsidized are not. Many students combine these two types in order to cover their tuition costs. Starting this upcoming year, Stafford Loans will allow dependent undergraduates to borrow up to $3,500 their freshman year, $4,500 their sophomore year and $5,500 for each remaining year that they remain in college. Repayment for the loan begins six months after graduation or if the student drops below part-time enrollment.

The Perkins Loan

The Perkins Loan is awarded to undergraduate students with exceptional financial need. This loan allows the school to act as the lender by utilizing funds that have been provided by the federal government. This is the best loan available since not only is it subsidized, but also remains at a low fixed rate. Loan amounts differ between schools, but there is a maximum of $4,000 that can be given to an undergraduate student each year. Payment begins after graduation and there is a standard ten year repayment period.