Student loans are a big source of funds to pay for the cost of attending college.
Types of Student Loans
There are two types of student loans: federal student loans offered directly by the US Department of Education and private student loans offered by private lenders.
Federal Student Loans
Federal student loans are loans funded by the federal government to help pay for your education. A Federal student loan is borrowed money you must repay with interest. Generally, federal student loan payments are not required until after graduation or separation from the school. And come with additional federal benefits such as Income-Driven Repayment plans and loan forgiveness.
As long as you meet basic eligibility requirements, federal student loans can help fill in the gap that scholarships, grants, and work-study don’t cover.
Types of federal loans:
- Perkins
- Stafford
- PLUS Loan program (graduate, professional, and parents)
- Direct Loan Consolidation
Private Student Loans
Private student loans are nonfederal loans made by a lender such as a bank, credit union, state agency, or a school. The private lenders set the conditions, terms, rates, and approval process. With private student loans, you’re not required to complete the FAFSA but must apply directly with each lender.
Private loans lack the federal benefits but may come with additional perks.
Types of private student loans:
- Undergraduate
- Graduate and Professional
- Consolidation or refinancing
Payments are generally not required until you graduate or leave school. They do not have the same federal protections or benefits but interest rates may be a bit more competitive.
Learn more about Federal and Private Student Loans.
