College can be super overwhelming, especially when dealing with annoying finances. With different loans and policies all jumbled up in your head, you need some clarity. Here is a confuse-free way to see which student loan is right for you.
Subsidized Stafford Loan
- You must be a U.S. citizen or eligible non-citizen.
- Undergrad students can borrow a maximum of $23,000.
- You don’t have to pay until 6 months after graduation. Payment is due 10 years later.
- You can ask for a deferment (postponement for repayment) or forbearance (postponement with interest.)
- The interest rate is 6.8%.
Unsubsidized Stafford Loan
- Unlike a subsidized loan, this is not based on financial need.
- U.S. citizens or eligible non-citizens can apply.
- Dependent undergrads can borrow up to $31,000.
- You also have 6 months to start repaying and you must complete it in 10 years.
- A deferment or forbearance can be used.
- The interest is also 6.8%.
- If you are in financial need then you should have no problem applying for this loan. (As long as you are a U.S. citizen/ eligible non-citizen.)
- Undergrads can borrow a max of $27,500.
- You have 9 months after graduation and 10 years to complete payment.
- The interest rate is 5%.
Parent Plus Loan:
- This loan is taken out by parents or legal guardians with good credit scores.
- Your parents or guardians can borrow the total cost of tuition.
- They have 10 years to pay and can use deferment or forbearance.
- Repayment begins as soon as it is given out.
- Interest rate is 7.9%.
Private Student Loan “Alternative Loan”:
- You or your parent can take out this loan.
- There aren’t many repayment and deferment options.
- Approval depends on your credit score.
- Interest, which is based on your credit score, is higher than federal education loans.
- You must have one or more eligible federal student loans.
- You can take out as much as you want.
- You can increase repayment up to 30 years. But be careful, interest also increases.
- You can have a deferment or forbearance.
- Interest rate is capped at 8.25%.