What to Know About Student Loans

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Student Loan

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. 

Student Loans:

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%.

Perkins Loan

  • 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.

Consolidation Loan

  • 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%. 

Sources: 

ASA

FinAid

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