student loans

A Quick Guide to Student Loans

Taking out a student loan may be the only way to make college affordable. But it’s a good idea to learn about the different types of student loans available and what your repayment options will be after you graduate.

Making some informed decisions about your finances before the school year begins can help put you on the fast track to financial success after graduation.

If you haven’t been able to secure college grants or scholarships, and don’t have the means to pay for higher education yourself, student loans may just be your only alternative for covering the high cost of college.

Use this brief guide to help you choose the right student loan that meets your needs:


There are several different types of student loans to choose from, and some have better repayment options than others. Your choices include:

  • Federal Family Education Loan Program (FFEL) – provided by private lenders, including banks and credit unions, and are guaranteed by the Federal Government.
  • Federal Direct Student Loan Program (FDSL) – funded directly by the U.S. government.
  • Stafford Loans – subsidized or unsubsidized loans with low interest rates. If you’re not eligible for a loan from a private lender and can demonstrate financial need, this is the loan for you. (Note: with a subsidized loan, the government pays the interest on the loan while a student is in school).
  • PLUS Loans – low-interest loans that parents can apply for on behalf of dependent undergraduate students.
  • Perkins Loans – a type of federal loan that is designed to assist students who have an extreme financial need. These are subsidized loans and have very low interest rates.
  • Consolidation Loans – these will combine existing loans into one loan so that you can lower your monthly payment and if you choose to, have your payback period extended.
  • Private or alternative loans – student loans issued by private banks and lenders. These can help to cover college expenses that are beyond the government loan limit.

A word to the wise: You should always seek federal loans before trying to get a private loan.

Federal loans have better loan forgiveness options, and better alternatives if you run into financial trouble and need to get a loan forbearance or deferral.

Additionally, federal loans charge lower interest rates and fees, and provide greater flexibility in repayment options.

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