Student Loan

Student loans are designed specifically for students in higher education and provide additional income towards the cost of their education and general living expenses.

There are many types of student loans to choose from, and it's important to find one that is right for your particular situation. There are three main kinds of federal loans: Federal Stafford Loans, Federal Plus Loans and Federal Perkins Loans. However, one important factor to note about these loans is that they are reported to a credit bureau, which means that if you are late on payments, or default on your loan, it could damage your credit.

Federal Stafford Loans

These loans can be obtained from a bank, credit union, or directly from the government and are awarded based on financial need. They are regulated by the federal government. There are two major types of Federal Stafford Loan to choose from:

• Subsidized Federal Stafford Loan - a long-term and need-based loan with a low-interest rate. The government pays the interest on the loan while a student is in school or when the student requests a grace period or deferment.
• Unsubsidized Stafford Loan - a long-term and non-need-based loan with a low-interest rate. Almost all household incomes qualify, although unlike subsidized loans, the interest on the loan is the responsibility of the borrower.

Federal Plus Loans

A type of loan available to parents whose children are attending college as full or half-time undergraduate students. Federal Plus Loans are awarded based on cost of attendance and credit history. Although the interest is low, repayment usually starts within 60-90 days after full disbursement of the loan, or after the student graduates.

Federal Perkins Loans

This type of loan is awarded to students based on extreme financial need, and typically has a very low interest rate. However, the total funds available for these loans is limited, which means that the amount of the loan will normally be relatively low. The interest will not begin to accrue until 9 months after a student graduates or drops below half-time enrollment.