After receiving scholarships and grants, there may still be a need for more funding for your child's education. It is best to first begin with federal loans before applying for private loans to fill the gap.
Types of Student Loans
Perkins Loan – a federal, low-interest loan with an annual maximum of $6,000 for graduate students.
Stafford Loan – the most popular federal student loan currently has a low, fixed interest rate. Stafford loans may be subsidized (the federal government makes interest payments while you're in school, if you qualify based on need) or unsubsidized (you will begin making interest payments right away).
No co-signer is needed for either the Perkins or Stafford loans; you must be enrolled at least part-time, be a US citizen or permanent resident, "and be in good academic standing".
Parent PLUS Loan – this federal loan picks up where the Perkins and Stafford loans leave off. You can borrow up to the cost of attendance less any other financial aid received and the interest rate for this loan is fixed. This loan is awarded according to your credit history. Repayment for the PLUS loan may be deferred while your child is in school.
Private/Alternative Loan – offered by various banks and financial institutions, these loans should be considered after all other financial aid sources are exhausted. Loan approval is based on your credit history. Your child’s school may have a list of lenders that have programs available for your financial situation, but shop around for the best rates and borrower benefits.
Loan terms you should know
Deferment - The temporary postponement of loan payments; during this time, the borrower doesn’t have to pay either principal or interest.
Forbearance - Temporary postponement or reduction of payments because of the borrower’s financial difficulties. A forbearance also may be an extension of the repayment period. All borrowers are charged interest during forbearance.
Grace Period - an allotted amount of time during which you are not expected to make payments on your student loans after initially leaving school or dropping below half-time status
Income-sensitive repayment - Payments based upon your income, and must be at least the amount of your monthly interest (adjusted annually).
For more information on student loans, click here
