Stafford Loans
Stafford Loans are federal loans for both undergraduate and graduate students. It is not necessary to show financial need to be eligible for a Stafford Loan.

• Students attending "Direct Lending Schools" have their loans administered by the school and the loans are provided directly to students and parents. These are known as Federal Direct Student Loan Program (FDSLP) loans.

• Students not attending "Direct Lending Schools" receive their loans from private institutions like banks, savings & loans and credit unions. These are known as Federal Family Education Loan Program (FFELP) loans and are guaranteed against default by the federal government.

• Stafford Loans can be subsidized only when the student demonstrates financial need. The interest is paid by the federal government while the student is in school or during authorized periods of deferment with a subsidized loan. Unsubsidized loans will be charged interest from the time the loan is disbursed until it’s paid in full. The interest will accrue (accumulate) while the student is in school or during other periods of nonpayment. It can be capitalized—that is, the interest will be added to the principal amount of the loan, and additional interest will be based on that higher amount. This increases the amount to be repaid after graduation.

• Generally, the total debt you can have outstanding from all Stafford Loans combined is
  • $23,000 as a dependent undergraduate student.
  • $46,000 as an independent undergraduate student (only $23,000 of this amount may be in subsidized loans).
  • $138,500 as a graduate or professional student (only $65,500 of this amount may be in subsidized loans). The graduate debt limit includes any Stafford Loans received for undergraduate study.
• The interest rate on a Stafford Loan is variable, but it cannot exceed 8.5%.
• A fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement is assessed. For a FFELP Stafford Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency to help reduce the cost of the loans. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if the student doesn’t make their loan payments when scheduled, they may be charged collection costs and late fees.
• Stafford Loans can be partially cancelled if the student becomes a full-time teacher for five consecutive years in a designated elementary or secondary school serving students from low-income families.

Perkins Loans
Perkins Loans are awarded to both undergraduate and graduate students on the basis of  exceptional financial need. The school acts as the lender. The funds come from a limited allotment of funds provided by the federal government.

• Perkins Loans are subsidized. The federal government pays the interest while the student is in school and for a 9 month grace period.

• There are no origination or guarantee fees.

• The interest rate is 5%.

• There is a 10 year repayment program.

• The school's financial aid office determines the actual amount any one student's loans. The limit per year for undergraduates is $4,000 and $6,000 for graduate students. Students are limited to a cumulative total of $20,000 as undergraduates and $40,000 for undergraduate and graduate loans combined. Some schools are allowed to exceed these limits by up to $1,000 per year and offer correspondingly higher cumulative amounts due to their overall low default rates of under 15%.

• There are a variety of ways that Perkins Loans can be cancelled by meeting the criteria of the forgiveness programs. These include certain types of volunteer work, military service, teaching or practicing medicine in certain communities and others. Information on Perkins loan cancellation can be found on the Student Guide section of the Department Of Education website by clicking here.

Plus Loans
Plus Loans are loans that parents take out to help pay for their child's undergraduate higher education.

• Plus loans are not subsidized. Interest rates are variable but will not exceed 9%.

• As is true for Stafford Loans, there are FFEL PLUS Loans and Direct PLUS Loans.

• Plus Loans require passing a credit check.

• The yearly limit on a PLUS Loan is equal to the cost of attendance minus any other financial aid received.

• The parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans.

• Plus Loans can be partially cancelled if the student becomes a full-time teacher for five consecutive years in a designated elementary or secondary school serving students from low-income families.

• FinancialAid.com offers PLUS Loan for parents of undergraduate students-- as low as 2.22% interest!

Private Loans
Private loans are loans with no government involvement. They are loans provided by private lenders such as banks, savings & loans and credit unions. They do not require evidence of financial need. Parents and students must meet the eligibility requirements of the lender to secure these loans. The terms and repayment of private loans may be more flexible that federal loans but they tend to cost more. Many parents consider equity loans as a private loan vehicle. One lender providing personal loans with online applications is E-LOAN.

Consolidation Loans
A Consolidation Loan allows you to combine one or more of your federal education loans into a new loan that offers you several advantages such as one monthly payment, flexible repayment options, and reduced monthly payments. Consolidation can significantly increase the total cost of repaying student loans. There generally is a longer period of time to repay a consolidation loan, but there will be more payments and thus more interest. Two lenders who provide consolidation loans with online applications are Scholar Point and Next Student.