There are two different types of Federal Direct Stafford Loans: subsidized and unsubsidized. If your loan is subsidized, the government pays the loan's interest while you are in school or during periods of authorized deferment, whereas with unsubsidized loans, you are responsible for paying any accrued interest on your student loan. The advantage of taking out a Federal Direct Stafford Loan is that your interest rate is fixed throughout the repayment term. The limits and interest rates for Direct Stafford Loans are as follows: $5,500 Freshman; $6,500 Sophomore; and $7,500 Junior, Senior and fifth-year undergraduate students. I
The Federal Perkins Loan is very similar to Federal Direct Stafford Loans, except that the interest rate is fixed at 5 percent and you must qualify for the loan itself. To qualify for the Federal Perkins Loan, you must be able to demonstrate a certain level of financial need. Need is determined by the U.S. Department of Education according to a standard formula established by Congress. This information is taken from the information provided in your FAFSA application.
The Federal PLUS loan is a student college loan that your parents must take out for you. It can cover up to the full cost of attendance. Like the Federal Stafford and Perkins Loans, the interest rate on a Federal PLUS loan is fixed, though at a higher rate of 7.9 percent with a 4 percent origination fee.
To apply, you must fill out a Free Application for Federal Student Aid each year and have it submitted to your undergraduate institution. This may require you to acquire your parents' tax returns, if you're still considered a dependent. You will then receive an award letter that outlines your loan amounts and types. Your Federal Student Loans will require partial repayment beginning six months after your graduation date.
You also have the option of taking out a private student loan. Private loans for college are credit-based student loans that aren't backed by the federal government and, as such, may not have fixed interest rates. Thoroughly examine your budget with the federal loans before deciding to take out a private student loan, as private student loans can negatively affect your credit.