To pay for your dream school, you may need to take out some student loans. Look to lower-priced federal loans first, such as the Stafford loans, before considering private and alternative loans.
Stafford loans are available to undergraduate and graduate students that attend classes at least half-time. Typically, there are no credit checks with Stafford loans. Loan payments are deferred until six months after you graduate or leave school.
Stafford loans are available through the William D. Ford Federal Direct Loan Program (DL) and the Federal Family Education Loan program (FFEL).
With direct loans, the money is borrowed directly from the federal government and borrowers make repayments to the federal government.
In the FFEL program, the money is borrowed from a bank or credit union or other lender participating in the program. Both programs offer students subsidized and unsubsidized Stafford loans.
With a subsidized Stafford loan, the government pays for the interest on your loan while you attend classes (as long as you’re enrolled at least half-time), during the six-month grace period after you leave school, and if you should defer payments. To qualify for a subsidized Stafford loan, you must show financial need.
With an unsubsidized Stafford loan, you are responsible for the interest on your loans at all times.
Many students borrow a mixture of subsidized and unsubsidized Stafford loans to pay for their college educations.
Federal loans are available to parents, too. These loans, known as PLUS loans, require a credit check.
The yearly borrowing limit on a PLUS loan is equal to the yearly cost of attending your college or university, minus any financial aid that you may be eligible for. Some parents turn to PLUS loans to pay for all or most of their expected family contribution.
Like Stafford loans, PLUS loans are available through the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan program.
There is no grace period with PLUS loans. Your parents must begin repaying the loan while you’re in school.
