There are two basic categories of loans available: government loans and private loans. In general, the government loans for students (also called Stafford Loans) should be your first stop. Parents should consider government loans for parents (also called PLUS Loans). Occasionally, private loans can be competitive with the government programs. Ask your financial aid administrator if your school is a "Direct Lending" school -- If so, you can get government loans directly without a third party lender.
Private or "alternative" loans require NO GOVERNMENT FORMS and can be a great solution if after receiving your government loans and grants, you still find a gap between your available funds and your costs.
Once you've finished going to school, consolidation loans can help lower your payment amount and combine multiple payments into one, easy to make payment.
There are many types of student loans to choose from, and it’s important to find one that is right for your particular situation. The two main types of loans are federal loans and private loans.
There are three main types of federal loans:
Federal Stafford Loans - These are awarded based on financial need and are regulated by the federal government. They can be obtained from a bank, credit union, or directly from the government. There are three kinds of Federal Stafford Loans to choose from:
Federal Plus Loans - These loans are available to parents whose children are attending college as full or half-time undergraduate students. They are awarded based on credit history and cost of attendance. The interest is low on this type of loan, but repayment usually begins within 60-90 days after full disbursement of the loan, or after the student graduates.
Federal Perkins Loans - Perkins loans are awarded to students based on extreme financial need, and usually have very low interest rates. The total funds available to be disbursed for these loans is limited, however, which means that the amount of the loan will likely be relatively low. The interest doesn't start to accrue until 9 months after a student drops below half-time enrollment or graduates. If you're not sure if you qualify for a Perkins Loan, ask a college financial aid advisor. One important thing to note about these loans: 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.