Federal Perkins loans, according to the United States Department of Education, are made through qualified schools to full- or part-time students earning undergraduate, graduate or professional degrees. Loans are offered to students who can show financial need and are repaid directly back to the school. Students borrowing money through the Federal Perkins Loan Program either pay back the funds to the U.S. Department of Education Direct Loan program or to private lenders backed by the government in the Federal Family Education Loan (FFEL) program.
Stafford loans are provided to undergraduate and professional degree students who are attending school at least part-time. If financial circumstances warrant, students may receive a subsidized Stafford loan, which means the U.S. Department of Education pays the interest that accrues for a certain time period. To receive an unsubsidized Stafford loan, financial need isn't a factor and interest accumulates during the entire loan period. Students borrowing money through a Stafford loan either pay back the funds to the U.S. Department of Education Direct Loan program or to private lenders backed by the government in the FFEL program.
PLUS loans are used by parents to help pay for the cost of education for their dependent, undergraduate children. Graduate or professional degree students may be able to receive a PLUS loan to pay for their own education. A PLUS loan may have a slightly higher interest rate than a Perkins or Stafford loan. As of February 2011, the fixed interest rate for a PLUS loan was about 7.9 to 8.5 percent. Students borrowing money through the PLUS loan program either pay back the funds to the U.S. Department of Education Direct Loan program or to private lenders backed by the government in the FFEL program.
Student loans are considered borrowed money and must be repaid with interest like any other consumer loan. Repayment on student loans usually don't start until after the education or degree is completed. However, if you quit before finishing your education, you will likely need to start repaying the student loan immediately in monthly installments. Interest rates, as of February 2011, ranged from 5.6 to 8.5 percent, depending on the type of loan received. The loan terms and amounts available for students vary by the type of loan the student receives and needs.