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Student Loans for College - Student Loan Programs
Few students can afford to pay for college without some kind of supplemental financing. Scholarships, grants, work-study and other forms of aid often do not cover the full cost of a college education.
Education loans can be separated into 5 catagories: student loans, parent loans, private loans, alternative loans and consolidation loans. An overview of these loan types are outlined below. Links are provided to official government sites and recommended education lenders.
Since the federal government provides the majority of financial aid to students and the costs are often times less than that of alternative loan programs, you should investigate your options for federal funding first.
Federal Government Student Loan Programs (Stafford Loans)
Many students rely on federal government loans to finance their educations. These loans have low interest rates and do not require credit checks or collateral. Student loans also provide a variety of deferment options and extended repayment terms. To apply for a Stafford Loan, you must submit the Free Application for Federal Student Aid (FAFSA). Learn more.
Federal Government Parent Loan Programs
Parents of dependent students can take out loans to supplement their children's aid packages. The federal Parent Loan for Undergraduate Students (PLUS) lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance. Like the Stafford Loan, PLUS loans are either FFELP (provided by private lenders, such as banks) or Direct (funds provided by the government). Learn more.
Private Loans
Some families turn to private loans when the federal loans don't provide enough money or when they need more flexible repayment options. For example, a parent might want to defer repayment until the student graduates. Lenders can provide different types of private loans depending on the student's level of study, financial status, future earning potential and other factors. Private loans tend to cost more than loans offered by the Federal government, but not in all instances, so shop around!
Alternative Loans
Alternative loans include home equity loans, lines of credit, and borrowing from retirement funds. Because of the potential trade-offs involved, you should always consider the other options available to you before proceeding with alternative financing. If you are pursuing an alternative loan because of bad credit, you should consider applying for a PLUS loan anyway. If you are denied a PLUS loan for credit reasons, your child becomes eligible for higher Stafford loan limits.
Consolidation Loans
A consolidation loan combines several student or parent loans into one larger loan from a single lender, which is then used to pay off the balances on the other loans. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some lenders offer consolidation loans for private loans as well.
