What are the Different Types of Student Loan Services?

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  • Written By: Alexis W.
  • Edited By: Heather Bailey
  • Last Modified Date: 26 January 2020
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The different types of student loan services can broadly be grouped into two categories within the United States. The first type are loans backed by the federal government. The second type of student loan services are private lenders that offer student loans.

Government-backed student loan services offer many benefits to those who need to borrow money for their education. There are many different types of government-backed student loans within the United States. Some of the most common examples include Stafford Loans and Perkins Loans.

When a student takes a government-backed loan, the loan may be subsidized or not. The government pays all or some of the interest on a subsidized loan while the student is in school and during periods when loan payments are deferred because the student falls into one of several eligible categories for deferment. This makes the interest rate either much lower or allows the student to avoid accruing interest during times when he is not making payments on the loan.

Many other services are offered by lenders who issue government-backed loans. Some of these other student loan services include loan forgiveness if the student performs a certain number of years of public service work. Flexible repayment plans are very common with government-backed loans. A student usually may sign into his account online and change his payment method, opting for plans such as graduated repayment or an income contingent plan.


Most lenders who offer government-backed loans for students also offer various additional benefits as well. Common features include the option to reduce the interest rate of the loan by making a set number of payments on time. Interest rates with many lenders may also be reduced by establishing a direct debit payment schedule and having the money for the student loan payments automatically deducted from the student's checking account.

Private student loan lenders also offer a way for students to pay for their education. These loans may not have the advantageous features that government backed loans have. While they may still be easier to qualify for than loans not classified as student loans, they will tend to have higher interest rates and less flexible repayment schedules than government-backed loans. Private loans are also not eligible to be consolidated with government loans, which means it will not be possible for the student to choose this as an option to group his loans and lock in favorable interest rates.



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