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Loans for College

Loans for College

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Published by CollegeCarrot.com

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Published by: CollegeCarrot.com on Aug 28, 2008
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09/21/2010

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Loans for College
Understanding the Different Types of Loans
 
Two Major Types of Loans
Non-federal Loans (Private,other sources)
 –Not based on need –Not government guaranteed –Terms controlled by lender  –Interest rates may vary and fluctuate –Most must start repayment immediately
Federal Education Loans (Federal Government)
-Starts with the completion of a FAFSA form-Perkins loans – need based-Stafford loans – two types, one based on need and one not-PLUS loans – for parents, not need based-Fixed interest rates and sometimes interest and repayment deferred-Some subsidized (government pays interest while student in school)
 
Federal Loans
Federal loans are one of the Title IV programs
Title IV refers to a section of the federal Higher Education Act of 1965, asamended, which authorizes the vast majority of federal student financialassistance programs.
Federal loans are “guaranteed”
Federal loans are loans that are guaranteed by the federal government. Thismeans that if the student (or other borrower) defaults on the loan (fails topay it back), the government will reimburse the lender.
Federal loans are a good deal
They generally have lower interest rates and better terms that other loans.
Some loans are subsidized
Means that the government pays the interest while the student is in school.
There are 3 types of federal loans

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