A Perkins loan is issued by the college or university that you attend and is subsidized by the federal government. Each school is allotted a certain amount of government funding for Perkins loans and it is up to the school to determine how the funding is distributed to students. The annual limit is $5,500 for an undergrad student and $8,000 for a graduate student. Because the Perkins loan is subsidized by the federal government, the government pays the interest while you are in school and for the first nine months after graduation. Perkins loans are repaid over 10 years.
Stafford loans are supported by the federal government. In order to qualify for a Stafford loan, you must fill out the Free Application for Federal Student Aid (FAFSA). If you are deemed to have significant need, you may be awarded a subsidized Stafford loan, which means the government will pay the interest on the loan while you are in school. These loans are usually paid back within 10 years after graduation, but extended payment plans can take up to 30 years. The subsidized loan limits are $3,500 for the first year, $4,500 for the second year and $5,500 per year for the third year and beyond.
Even if students do not qualify for subsidized Stafford loans, they can get unsubsidized Stafford loans after filling out the FAFSA. These loans accrue interest during the college years and you can either make interest-only payments while in school or allow the interest to accrue. The loan limits are the combined total of subsidized and unsubsidized loans. If you are a dependent on your parents' taxes, the first year you can have a total of $5,500, the second year limit is $6,500, and each year beyond that is $7,500. If you are an independent student, you may borrow $9,500 the first year, $10,500 the second year and $12,500 for each extra year.
Grad PLUS loans are available only for graduate students who are attending school at least half-time. The loan amount is limited to the cost of attendance minus other financial aid. Borrowers must pass a credit check but do not need a co-signer. The 2009 interest rate is 8.5 percent, and repayment does not start until after the borrower leaves school. The standard repayment period is 10 years, but can be lengthened to 25 years for qualified borrowers.
Federal loans are not always enough to cover the costs of higher education. Several companies that offer private student loans are Sallie Mae, Educap and Citi. However, these loans will often have higher fees and interest rates than federal loans and will require a credit check. Students with these loans will usually have less time to repay them. For students who do not have a credit history, or have a poor credit score, these loans may not be an option.