What Are My College Student Loan Options?

Now, more than ever, there is quite a large array of loan and financial aid options available for both undergraduate and graduate students in need of extra money for school. The primary college student loan options available are: federal Stafford and Perkins loans, private student loans and federal PLUS loans.

Stafford / Perkins Loans

These loans are provided through the Federal Direct Loan Program, a division of the U.S. Department of Education. However, the Perkins loan actually is given to you by your school… so the process can seem a little convoluted at first glance.
To summarize the Stafford loan, there are 2 types: unsubsidized and subsidized. Subsidized Stafford loans are exclusively for students with strong financial need and and unsubsidized Stafford loans are available to all students who file a FAFSA.
Perkins loans are for students with exceptional financial need and are decided by the school’s financial aid department. The money actually comes from the government though, so it technically is a federal student loan.

Private Student Loans

Private loans are also referred to as alternative or supplemental student loans. They are credit-based — meaning you need to have a good credit score or a creditworthy co-signer to get one — and have a variable interest rate. Of all the college student loans, these can theoretically have the highest interest rates, though this totally depends on your credit.
However, private student loans also offer the largest variety in the form of borrower incentives. These can include co-signer release, graduation rewards, APR reductions and more depending on the lender.

PLUS Loans

PLUS loans come in two flavors: Parent PLUS and Graduate PLUS. Parent PLUS loans are only available for parents of undergraduate students and the Graduate PLUS loans are exclusive to graduate students. These loans are NOT transferrable once borrowed, meaning the parent can’t force the student to take on the debt after graduating.
They are useful because they cover up to 100% of your total cost of attendance, while maintaining a fixed interest rate (currently 7.9% in 2010-2011) and several repayment plans.
** Please keep in mind that the Student Loan Network always recommends that you expend your available cash reserves, scholarships and federal student aid intelligently before you consider a private student loan.