Federal student loans offer the best terms over every other competitor in the market. There are two different types of federal student loans: the Stafford loan and the Perkins loan. Stafford and Perkins loans are offered directly to students, have low origination fees (1 to 3 percent of the loan), and low interest rates. Repayment doesn't start until six months after graduation and can, in some cases, be deferred based on need. They have flexible repayment plans, and work with borrowers who get into financial trouble by allowing the loan to go back into deferment, or restructuring the repayment plan.
Some states may offer student loan programs that, while often inferior to the flexibility and low cost of federal loans, are preferable to private student loans or credit cards. State programs vary widely in rates, terms, and repayment plans, so do your research before borrowing. A helpful resource for finding out more about your state's student loan programs can be found at CollegeScholarships.org.
Parent PLUS loans are federal education loans offered to a student's parents to help pay for their child's education. While the interest and terms are less favorable than Stafford and Perkins loans, they are still preferable to other student financing options, and are very competitively priced. While some state programs may prove more favorable, PLUS loans offer flexibility in repayment and affordable terms. One drawback is that the loans are the parents' responsibility to repay, rather than the students'.
Private student loans are widely acknowledged to be the least favorable in terms of both interest and fees as well as repayment plans. Because of the profit-driven nature of most private lenders, securing a private student loan requires having a qualifying credit score, or a cosigner with a qualifying score. The interest and fees varies by lender and, in some instances, the lender can charge origination fees of 12 percent of the loan total, compared to the uniform 1 to 2 percent charged by the federal program. Private loans should be considered only if all other options have been exhausted. However, if you consider using a credit card, applying for a private student loan can result in better terms and money saved in the long run.