| If you are thinking about applying for a new school | | | | There are four main types of School Loans that you |
| loan or consolidating your current school loans now | | | | need to know about; |
| that you have graduated, the information provided in | | | | Perkins Loans are need-based loans and are awarded |
| this article should help you determine which loan you | | | | by the financial aid office to students with the |
| will need and the terms and conditions of the various | | | | highest need. The interest rate is very low-5 |
| loans. | | | | percent-and you don't make any loan payments while |
| Generally, student loans are categorized into either | | | | in school. |
| need base loans or non-need based loans, and there | | | | Subsidized Stafford Loans are need-based loans with |
| are federal and private loans available which fit into | | | | a fixed interest rate of 6.8 percent. With subsidized |
| both of those categories. | | | | loans the federal government pays the yearly |
| Features of Need Based Loans: | | | | interest while you're in school. |
| 1. Lower Interest Rates: The federal government is | | | | Unsubsidized Stafford Loans aren't based on financial |
| the main provider of need loans. The Stafford loan is | | | | need and can be used to help pay the family share |
| the most popular need based loan which is a fixed | | | | of costs. You're responsible for paying interest on the |
| interest rate loan of 6.8 percent. The Perkins loan has | | | | loan while in school. You may choose to capitalize the |
| a rate of 5 percent. | | | | interest. The advantage of doing this is that no |
| 2. Delayed Repayment: Need based federal loans do | | | | interest payments are required. The disadvantage is |
| not require you to repay the principal loan until after | | | | that the interest is added to the loan, meaning that |
| you graduate or leave school. This is a deferred | | | | you will repay more money to the lender. |
| payment loan. | | | | Grad PLUS loans are student loans for graduate |
| 3. Interest Subsidization: As interest accrues on the | | | | students sponsored by the federal government that |
| loan, the government will pay this interest while you | | | | are unrelated to need. Generally, students can |
| are in school and for up to 6 months after | | | | borrow up to the total cost of education, minus any |
| graduation. | | | | aid received. The advantage of this loan is that it |
| Features of Non-Need Based Loans: Non-Need based | | | | allows for greater borrowing capacity. However, |
| loans are for students and their families who cannot | | | | students should consider lower-interest loans, such as |
| afford to pay 100 percent of the college tuition and | | | | the Subsidized Stafford or Unsubsidized loans prior to |
| costs, but do not qualify for need based loans due to | | | | taking out a Grad PLUS loan. |
| their income level. Non-need based loans typically | | | | You can read more about federal and private loans |
| have a higher interest rate, have no in-school interest | | | | that are incorporated into the need and non-need |
| subsidy and may require immediate repayment of | | | | categories at our website listed below. |
| principal. | | | | |