Students qualify for the federal Stafford Loan based on financial need, which is determined when students and parents/guardians complete the Free Application for Federal Student Aid (FAFSA). Student eligibility for a subsidized Stafford Loan is based on family, or household, income.
The subsidized Stafford Loan is one that many students try to acquire, as the government covers the loan's interest until the student is obligated to repay the loan. If the student borrows through an unsubsidized Stafford Loan, though, he or she is responsible for all interest that accrues.
The Stafford Loan includes a variety of repayment options, a grace period after the borrower graduates, and a number of lenders.
The Federal Parent Loan for Undergraduate Students (PLUS) program offers a loan to parents of undergraduate students, and a loan to graduate students. Like the Stafford, PLUS Loan eligibility is determined through household income, and also on what households can contribute to the cost of a student's education. PLUS Loans carry comparably low interest rates, do not have to be used only for tuition (a borrower can use the PLUS Loan for fees, books, meals, etc.), and have grace periods that can last for years.
Federal Perkins Loans are awarded to students based on extreme financial need, and usually have extraordinarily low interest rates. Because funding for this loan is limited and usually only provides students with a fraction of what they need to cover their higher education costs, the Perkins Loan should be seen as a supplement to another loan.
Students also can borrow from private loan sources such as a bank, or even the college or university to which they are applying. These loans often carry higher interest rates than federal student loan sources, and should only be used if the federal loan options are exhausted.