There are a multitude of scholarships awarded on both merit and financial need, and most governments, both federal and local, make grants available to students to assist with the cost of tuition. However, personal school loans can be of assistance to students after those avenues have been exhausted, or if a student's academic record limits his ability to receive grants and scholarships. Some loans are available from the federal government--usually referred to as "student loans"--and some are available from private corporations and banks, usually referred to as "personal school loans." Loans specifically for school often boast lower fixed interest rates, graduated payment plans and terms that allow the student to only begin paying back the loans when they are no longer in school. These were created as an option to support the more attractive scholarship and grant options.
Student loans from the federal government are available in subsidized and unsubsidized Stafford loans and in Perkins loans. (Dependent students may ask their parents to apply for PLUS loans with both the student and the parent on the promissory note.) Stafford loans, primarily for undergraduates who can demonstrate financial need, are made either subsidized, which means the student does not pay interest until they are no longer in school, or unsubsidized, which accrue interest paid monthly throughout the life of the loan. Perkins loans are for either graduate or undergraduate students with exceptional financial need and are paid for with shares from the school and the government. Banks also offer private loans to students as personal school loans, though they often charge higher interest and sometimes require payments throughout the life of the loan, even when the student is in school.
Before deciding to take a student loan, consider what type of loan is best for you. Which loan's terms will meet your budget, your life goals and your educational needs most efficiently? If you continue to work through school, you may choose the lower interest rate of an unsubsidized loan if you can make minimum interest payments while you're in school. If you want to be free to focus solely on school, and not work, you should consider subsidized or Perkins loans. And if your academic record reflects deficiencies in either GPA (grade point average) or percentage of classes attempted and completed, you may have to consider a private loan from a private lender, since that will place you on governmental financial aid probation. Private banks offer a variety of loan options, and it's always best to ask your current bank about their options before trying others.
Loans can mean the difference, for many students, between choosing to go to school and choosing to work. The loans are often used to supplement grant funding to cover the cost of living, tuition and books so that the student can concentrate fully on their academic work, and can help many nontraditional students (those who are independent, have children and families, or are returning to school) cover the costs of higher education.
However, it's important to be aware that personal loans for school are expected to be the last resort for students who have utilized available grant and scholarship funding to its extent. The loans can often add up over time, leaving the new graduate with a disproportionately large amount of debt just as they're trying to enter a career, and can damage a credit report or rating if not dealt with responsibly.