Federal student aid programs are administered by the U.S. Department of Education. Common types of federal aid include the Federal Stafford Loan and the Perkins Loan. If your loan is a Federal Family Education loan, the funds come from a participating bank, savings and loan or a credit union. If the loan is a Federal Direct Student Loan the money comes directly from the federal government. To qualify students must attend a qualifying school. There is no credit requirement, however, borrowers cannot be in default on a previous federal loan unless satisfactory payment arrangements have been made.
Several commercial lenders such as Sallie Mae, Nellie Mae and PLATO specialize in college loans and will provide loans to students. Generally speaking, their programs allow the lender to repay the principal on a loan after graduation from college, but the interest payments will need to be made while the student is still in school. These programs are much stricter about their participants and therefore participants cannot have bankruptcies, charged off loans, foreclosures, repossessions, open judgments, unpaid tax liens or prior educational loan defaults.
Individual colleges have their own loan programs which are made available to their students. The terms of these loans vary from school to school and from department to department. For example, the music department may offer no-interest loans of $5,000 for piano music majors while the theater department offers $3,000 loans to incoming freshmen. Inquire from the department chair about the different loan programs that may be available and the eligibility requirements for each.