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What are the Different Types of College Loans?

Hillary Flynn
Updated May 17, 2024
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Many students require financial assistance to attend college, but not everyone qualifies for scholarships and grants. Luckily, there are many types of college loans available, with options for every student. Some college loans are based on financial need, some are government loans available to all, some require a good credit history and can be acquired through private lending sources, and some are available specifically for parents of college students. The most common types of loans are:

Stafford Loans

Stafford Loans are either Federal Family Education Loans (FFELs) or William D. Ford Federal Direct Loans (Direct Loans). College loans in the Stafford family are for students. Direct Loans are funded by the government and FFELs are funded by banks and other private lenders. The choice of FFEL or Direct is up to the school, not the student. However, both programs are virtually identical as far as eligibility and amounts available, but the repayment terms may differ.

Stafford Loans are offered after a student completes the Free Application for Federal Student Aid (FAFSA). Information is transmitted to each school selected, then the school puts together a financial aid package that includes the type and amount of loans a student is eligible for. These loans are either subsidized or unsubsidized, depending on financial need. If a loan is subsidized, the federal government pays the interest while the student is enrolled at least half-time in college or is in a deferment or grace period.

PLUS Loans

PLUS Loans are also either Direct Loans or FEFLs, but they can be borrowed by parents of dependent students. Borrowers must have an acceptable credit history. Direct PLUS Loan applications are given out by a school's financial aid office. FEFL PLUS Loan applications are given out by a school's financial aid office, as well as by private lenders. PLUS loans are always unsubsidized. Though PLUS Loans have historically been known as "parent" loans, they are now also available to graduate and professional students with the same terms as the parent loans.

Federal Perkins Loans

Federal Perkins Loans are available at some, but not all, colleges. Eligibility is based on financial need, and each individual school determines how funds are to be allocated. Perkins loans may be given to both undergraduate and graduate students. There is no credit history requirement and loans are repaid directly to the college.

Private Lender Loans

When government college loans aren't enough to pay the full cost of attending school, private loans are available. There is a credit history requirement, but most loan programs allow a co-signer if the student does not qualify. For students who are interested in vocational programs that do not receive the same types of aid as traditional colleges, private college loans can make up the difference and allow the student to pursue the program of his or her choice.

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Hillary Flynn
By Hillary Flynn
Hillary Flynn's insatiable curiosity led her to join the WiseGeek team, where she contributes well-researched articles on various topics. In addition to her work with WiseGeek, Hillary manages an electronic publishing business that allows her to develop her skills in technical writing, graphic design, and business development. With a passion for satirical writing and traveling to historical places, Hillary brings a distinctive voice to her content.
Discussion Comments
By cougars — On Apr 25, 2011

Does anyone know how to apply for community college student loans? Is it the same as applying for a four-year institution? I never went to college, and now I have decided that I would like to go back to school. I am interested in my local community college because they offer a nuclear technician associates in partnership with a local power utility. I would love to go back to school, but the financial aid process is honestly quite daunting.

By GlassAxe — On Apr 24, 2011

@Alchemy- It is great that you are returning to school, especially as a parent. It can be really tough to afford to go to school with little ones at home and a job.

I am also a parent returning to school so I had to deal with similar things. Without student loans and grants, I would never have been able to go back to school. What I did was petition my financial aid office to raise my estimated cost of attendance so I could borrow more for school. I met with a financial aid adviser and she was very helpful at helping me find the necessary paperwork.

The school raised my cost of attendance without a problem. All I had to do was supply information regarding childcare. I even qualified for subsidized daycare through the university. The daycare program did have a long waiting list however, so my daughter will not enroll until the fall.

By Alchemy — On Apr 23, 2011

How does a school determine my eligibility for student loans? I am a parent and I work part-time. I have more expenses than the average student right out of high school. I was awarded a financial aid package based on my cost of attendance, but it did not include things like childcare expenses, etc.

My financial aid package included college student loans, but I did not receive the maximum loan amount allowable. I will need to borrow more for my education, but I would much prefer to use federal loans because they have lower interest rates than private loans. Does anyone have any advice?

Hillary Flynn
Hillary Flynn
Hillary Flynn's insatiable curiosity led her to join the WiseGeek team, where she contributes well-researched articles...
Learn more
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