Funded by the federal government, Stafford loans supplement a college or university student's personal and family resources, regardless of credit history. Students with financial need qualify for subsidized Stafford loans, which feature a fixed interest rate as low as 4.5 percent for the 2010-11 school year, according to StaffordLoan.com. The student doesn't have to repay the loan as long as she's enrolled in school at least half-time, and interest does not accrue on the loan until the student leaves school. Unsubsidized Stafford loans--granted without regard for the student's financial situation--accrue interest as soon as the school receives the funds. Students may choose to pay the interest while in school or allow it to accumulate and add it to the loan. Students can apply for either Stafford loan using the Free Application For Federal Student Aid (FAFSA).
A Perkins loan, for students who demonstrate an extreme financial need, requires U.S. citizenship, at least half-time enrollment and satisfactory academic progress. It has a low interest rate, usually 5 percent, and offers the student the benefit of no fees and a longer grace period to repay the loan than subsidized Stafford loans. Students must use the FAFSA to apply for a Perkins loan.
Private lenders offer private education loans, sometimes referred to as alternative education loans. While private lenders don't require borrowers to fill out any federal forms, the borrower's credit score determines his eligibility, and the loans have variable, and usually higher, interest rates than those offered by the government. Private loans don't require a cosigner, but having a qualified cosigner may help the student get approved at a better interest rate.