4 Types of Federal Student Loans

Most students will borrow federal student loans in order to pay for college. There are different types of loans, and some do not qualify for all of them. Often federal loans are not enough to cover tuition, and private loans are used to supplement. There are four main types of federal student loans.

1. Stafford Subsidized

Subsidized loans are loans that have no interest during the deferment period. Not everyone qualifies since you need to have some financial need. There is a maximum of $3,500 per year for a freshman, and this can be lowered if combined with unsubsidized loans.

2. Stafford Unsubsidized

Unsubsidized loans have interest that is compounded during schooling. You can choose to make interest payments to keep your balance low while you are still in school. There is a limit of $2,000 for freshman, making a total of $5,500 if combined with subsidized loans.

3. PLUS Loans

These are loans taken out by parents if the student needs more funds than the federal government offers. These are federal loans that the parents will repay. They will have more favorable terms than a private loan.

4. Perkins

Perkins loans are funds that are paid directly to the school, and the school disperses them to the students with the greatest need.


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