Direct Student Loans

Direct student loans are categorized into two basic categories. The first one is the Stafford Loan and the other is the Federal Family Plus loan. Stafford loans are further divided into sub-categories- subsidized and unsubsidized. In this article, let’s talk about the basic facts that you should know about loans for college financing.

Stafford Student Loans

The subsidized Stafford loan is exclusively offered for students who are completely incapable of financing their college education. This is the most affordable among student loans for college because the interest rate fees will be paid by the government while the student attends regular schooling.

Meanwhile, unsubsidized Stafford loans are those who need additional support. With this type of loan, the borrower is subjected to pay back the complete amount borrowed plus the interest rate costs. Starting July 1, 2006, all Stafford loans must have a fixed rate of interest which is set at 6.8%. Thus, the student can still enjoy a much lower interest rate than student loans provided by commercial lenders.

If you would like to know whether you are eligible for a subsidized Stafford Loan or an non-subsidized Stafford loan, go to the Free Application for Federal Student Aid website at http://www.fafsa.ed.gov/.

The Federal Family Plus Loan

Federal Family Plus Loans are created for parents who need financial assistance to send their kids to college. No collateral is required but the parent must be able to present good credit history in order to qualify. Some lending companies do not even require the submission of the FAFSA or the Free Application for Federal Student Aid.

Private Student Loans

Sometimes, the amount of money you can get from a Federal Loan may not be enough to cover for all your expenses. In this case, you may consider applying for additional loans from private lending companies. However, you can expect that these student loans will have much higher rates than the loans provided by the government.

If you have acquired a Federal student loan and one or two private student loans, consider managing your debts with a student consolidation loan. By combining your high interest rate loans into one loan, you can greatly reduce your rates and monthly costs. Nevertheless, since Federal Loans have low interest rates, you can choose to leave it outside consolidation and pay it off from the same lender.

About the Author

Samantha Wilson is a consultant for managing credit cards and finding the best student loans. For years she has written student credit card articles that helps build student credit, and student loan help articles that can be used as guides to handle student loan debt.

Copyright 2009

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