College Loans

College loans are loans given to students needing financial assistance to pay for higher education. College loans are issued by the government and must be repaid.

Should You Seek a College Loan?

Nearly all students are eligible to receive college loans. This is a viable option for several reasons, including:

  • Low interest rate - Federal college loan programs are not designed to financially punish those seeking a higher education. Therefore, college loans generally have a lower interest rate than private or consumer loans.
  • Flexible terms - Federal college loans offer flexible terms and repayment plans. Often, students do not have to repay the loan principal until they graduate.

Types of College Loans

There are many types of federal college loans, including:

  • Federal Stafford - This is perhaps the most common college loan. You must first submit an application to receive federal student aid (FAFSA). If you are awarded the loan, the government pays the loan interest until six months after graduation.
  • Federal Perkins - This loan program gives top priority to students with the greatest need for financial assistance. You must submit a FAFSA to be eligible. Perkins loans are similar to Stafford loans, but they offer a longer grace period and no fees. Principal payments are deferred until nine months after graduation.
  • Federal Parent PLUS - This loan is borrowed by the parent(s) on behalf of their child. Parents of independent students are ineligible. Loan repayment begins when the funds are awarded to the borrower.

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