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Student Loans
Loans differ than grants in several ways, the most important of which is
that loans, unlike grants, must be repaid. Loans and grants can work
together to help individuals pay for college. Every loan is different, and
it is important to understand how to choose the best loan, considering
interest rates, repayment schedules and a variety of other factors.
As grants do not have to be repaid, finding grant funding is often more
desirable for students than obtaining a student loan. Finding government
and other sources for grants to help you through college can be easy.
Click
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Examples and overview of education loan programs.
1) Stafford Loans
These loans are the primary Federal student loan structure operated by the
Department of Education. They include both the Federal Family Education
Loan (FFEL) Program and the William D. Ford Direct Loan (FDSL) Program.
a) Federal Family Education Loans (FFEL)
This loan programs guarantees and subsidizes low interest education loans
to both students and parents. The Federal Government subsidizes these
loans by paying interest subsidies to thousands of private lenders and
also guarantees these loans against default. The Student Loan Reform Act
of 1993 lowers FFEL borrower interest rates and origination fees.
b) William D. Ford Direct Loan Program
This loan program used to known as the Federal Direct Student Loan (FDSL)
program, before becoming the William D. Ford Direct Loan Program as part
of the Student Loan Reform Act of 1993. This program operates in
conjunction with the FFEL loan system and offers a streamlined loan system
that accounts for approximately 30% of student loans. This loan program
differs from FDSL in that the loan capital is provided directly by the
Federal government, instead of through subsidized private lenders.
2) Perkins Loans
These loans are campus based, with approximately 2000 institutions
participating. Perkins loans are long term, low interest loans. The
institutions must match every 3 dollars provided by the Federal government
with 1 dollar from the institution. Those seeking education and planning
to work in certain areas of society should pay particular attention to
Perkins loans. Some loans can be cancelled for those who engage in certain
public services occupations, such as law enforcement, nursing and special
education. There is no interest on Perkins loans while the student is in
school.
3) PLUS Loans
PLUS Loans are available through both the Direct Loan and FFEL loan
programs. They are available to parents with good credit histories to
cover the education expenses of each child who is a dependent, enrolled in
an undergraduate program at least part time.
Resources for learning more about education loans.
Student loan database from Students.gov
The Education Loan Center from The College Board
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