What Kind of Student Loans Can You Apply For?
Each year, a large number of American students search for solutions to fund the educational dreams that can improve their futures. Many of them quickly learn that their investigation into the world of student loans might just prove to be more complex than anything they will encounter once classes begin.
Experts on the matter suggest that all free money options, like scholarships and grants, should be exhausted before turning to loans to fund a college education. But for many individuals, free money options will not provide all the funds that are needed.
Student loan options fall under two major categories: Federal and private. The federal option includes more choice in types of loans available to students, as well as, programs that facilitate the repayment of these loans.
The following is a list of student loan programs that students can utilize to secure the funds needed to pay for their college educations.
1 - Subsidized Stafford Loan
Stafford Loans are perhaps the most common type of federal student loan. The money for these loans is provided by the federal government through a program known as the Federal Direct Student Loan Program. Stafford loans can be obtained in subsidized or unsubsidized versions.
Subsidized Stafford loans allow the student to defer loan payments until after graduation. Additionally, the government will pay all interest accrued on the loan while an individual continues to pursue an education.
Subsidized Stafford loans are for the most part reserved for students that display a financial need. In most cases, family income should be less than $50,000 to consider this loan option.
2 - Unsubsidized Stafford Loans
Students that make use of unsubsidized Stafford loans will be themselves responsible for paying the interest accumulation on the loan while still in college. The trade-off is that there are no income restrictions when applying for these loans.
Loan amounts range from $5500 to $12,500 annually dependent upon the student's current year of classification. It is also relevant whether or not someone else can claim the student as a dependent. Graduate students are allowed loan limits of up to $20,500. Combined Stafford Loans for undergraduate and graduate students are not to exceed $138,500 for a lifetime.
3 - Direct PLUS Loan
PLUS loans can be administered to students or their parents and a credit check is required to qualify. This loan option was designed with the graduate or professional student in mind that has been able to establish a credit history.
PLUS loan applicants that do not possess a credit history can benefit from the signature of a co-signer with a strong credit score. Students are not required to begin the repayment process of PLUS loans until six months after they graduate from college.
PLUS loans differ from many loan options in that they have no maximum loan limits. The interest rate for PLUS loans in 2017 was 6.31 percent.
4- Parent Plus Loan
This loan type provides parents with an option to finance the education of dependent undergraduates. One major difference between this and other loan types is that Parent PLUS loans require parents to make payments while their children are still attending college.
Parent PLUS loans cannot be transferred to their children but some private lenders will allow these loans to be refinanced in the names of the student.
5 Direct Consolidation Loan
Consolidating a group of federal loans into a single loan will benefit the graduate by allowing for just one loan payment each month. These monthly payments can often be lower than the accumulated payments for multiple loans and can be spread out over a period of 20 years.
Loan consolidation is convenient but may not be the best course of action for every borrower. This option should be thoroughly understood and carefully considered before a final decision is made.
6 - Private Education Loans
Private education loans, also known as alternative education loans, are available to students and parents that remain unable to adequately meet the financial obligations of college after all federal loan options have been utilized.
The process of securing a private education loan is quite similar to the personal loan process. An applicant's eligibility and assigned interest rate are decided by the credit history of the applicant. Rates of interest can be fixed or variable and are usually more than rates related to federal loan options. However, private education loans are often cheaper than other debts like credit cards.
7 - Student Loans For Health Professionals
Specialized loan types exist for individuals that are in pursuit of specific areas of medicine. Some examples of study areas covered by these loans are nursing, sports medicine, and veterinary medicine. Loan offers differ in their area of study and financial need requirements.
More about this loan option can be provided by the Administration of Health Resources and Services.