Types of Student Loans – What Are the Different Options?
There are several types of student loans that may be available to you. Your choice will depend on several factors including your credit, income and financial need. Here are some of the more common types of student loans:
Federal student loans are the most common first choice to consider because of their low fixed interest rates and other consumer protections they offer. However, if you already have a secured loan, you might also want to consider student loan consolidation to get a better interest rate. Consolidation allows you to combine both federal and private student loans into one new loan. This can make it easier and more convenient to pay off all your debts at once. Plus, if you’re getting a good interest rate through consolidation, you’ll save money in the long run. If you have a credit score less than 600, you may be eligible for a federal consolidation.
There are several different types of lenders available to students. They include traditional banks, credit unions, private student loans and online loan companies. Each type offers different types of student loans with different payment options. Lenders also offer different interest rates. Here’s a quick overview of these different types of student loans.
One of the most popular types of student loans is the Federal Direct Plan. This plan allows borrowers to consolidate their federal education loans with an automatic payment reduction. This means that each time borrowers make a payment, they only owe a single payment instead of several payments. Also, if a borrower is enrolled in a Government Plan or scholarship program, they may qualify for an automatic payment reduction up to one-half the interest rate.
Another popular type of federal student loans is the Perkins Loan. This type of loan is offered through the United States Department of Education. The Department of Education does not process student loans on its own; rather, it subcontracts out the work to other companies. The agency does, however, determine eligibility for the program based on income level and family size.
One of the popular types of federal government loans available is the Direct Consolidation Loan. This type of loan is available through Direct Borrowers, which is part of the U.S. Department of Education. A Direct Consolidation Loan may be a combination of both subsidized and unsubsidized student loans. Subsidized loans have lower interest rates, while unsubsidized loans have stricter repayment terms. A Direct consolidated loan must be repaid over the course of the borrowers’ educational career.
For borrowers who do not qualify for federal student loans, there are also private student loans. One of the best options is to borrow from a private student lender. However, private student lenders typically set their own repayment terms and rates. The borrower must do his/her research in order to find the best options for private student loans.
The fourth type of federal loan types is the Federal PLUS loan. The Federal PLUS loan was developed to help parents pay for the cost of educating their children. The name in itself tells you that this is a federal loan. In order to qualify for a Federal PLUS loan, a parent must either have an income that is too low or too high to qualify for federal student aid. If the parent has an income that falls into both categories, then the parent is considered a ‘low-income’ student and may be eligible for a Federal PLUS loan.
A parent PLUS loan can be used to pay for college costs through a combination of private student loans and Federal PLUS payments. Unlike a Federal PLUS loan, private student loans do not need to be repaid. Payments may be suspended for a certain period of time after graduation if the student is unable to find work. As with any other type of loan, payments will need to be made each month.
The final type of loan is the Federal PLUS or cosigner loan. Private student loans can contain private and federal options. Parents may use a cosigner in order to reduce the amount of payments for the parents. When using a cosigner, the parent will still need to make all payments.
No matter what type of student loans a parent applies, they must read the fine print. This will explain any and all options that are available and will explain the process of applying. Parents who are looking at the possibility of getting federal government money should apply for free application. If this does not work, then a parent should turn to an agency that specializes in getting these types of grants.