Loans

Public and Private Loans

Loans are available from the government and regular banks. Government loans are called Stafford, Perkins or Parent PLUS loans. Regular bank loans are also called private loans since they are given by private banks. Government loans differ from regular bank loans because they have lower interest rates, and government subsidies will pay the interest on Stafford loans while you are in college.

Your eligibility for loans is based on your family's financial need, determined from your FAFSA form. You will probably see one or more loans in your financial aid package. However, you will receive money for any private loans only if you indicate that you really want a loan by filling out and submitting a separate loan application.

What You Should Know About Loans

Student loans can be instrumental in making college education affordable, but remember that all loans must be paid back. Usually you do not have to start paying on your loans until you either graduate or leave college for an extended period of time. Before taking out a loan, make sure that you and your family understand the exact conditions.

Subsidized Loans

The federal government pays or "subsidizes" the interest on your loans while you are in college. This reduces the amount of money you have to pay back over the life of your loan. A subsidized loan is awarded on the basis of financial need.

Grace Period

All student loans have a six- to nine-month grace period between the time you leave college and the time you must start paying back your loans. Even if you do not graduate from college, you will still be expected to repay your loans. The repayment period for parent loans begins shortly after the loan is disbursed.

Loan Deferment

If you have an emergency that prevents you from repaying your loan, you can request a temporary loan deferment so that you do not have to make your loan payments during this time. You must apply and be approved before you can qualify for a loan deferment.