Now that we have the fundamentals under our belts, let's take a look at the specific kinds of loans for which you may be eligible:

  • Federal Perkins Loan: this loan is typically given to those students (undergraduate, graduate, and professional degree students) who display great financial need. These loans are distributed through your institution and must be repaid to your institution within a 10 year period.
  • FFEL Stafford Loans (subsidized or unsubsidized): to be eligible for any type of Stafford loan you must be at least a part-time student. You will receive a subsidized Stafford loan if you display financial need (remember, this means the federal government will cover the cost of interest that builds on the loan while you are in school or have an authorized deferment period), or you will receive an unsubsidized Stafford loan with accruing interest for which you are responsible (again, you won't be responsible for any of these interest payments until 6 to 9 months after graduation, withdrawal, or dropping below part-time enrollment status). Another important thing to remember about the FFEL loans is that they are not directly provided through the USDE; instead a private lender (most likely a bank) will supply the loan with funds that are guaranteed through the federal government. This simply means that instead of repaying the USDE, you'll repay your loan to whichever lender provides it (for example: Bank of America).
  • Direct Stafford Loans (subsidized or unsubsidized): again, to be eligible for a Stafford loan you must be at least a part-time student. This Direct Stafford Loan is similar to the FFEL Stafford Loan listed above in every way, but one. The USDE itself isthe lender in this case. Both the FFEL and the Direct Stafford Loan have a fixed interest rate of 6.0% for subsidized and 6.8% for unsubsidized. Likewise, for both the FFEL and Direct Stafford Loan you have between 10 and 25 years for repayment. The only difference between these two loans is the difference in lenders (either a private lender or the USDE).
  • FFEL PLUS Loans: the PLUS loan is a loan for which the parents or legal guardians of dependent part-time and full-time undergraduate and graduate students can apply. The PLUS loan works in order to compensate for any extra aid you need that you may have not received. For example, your estimated cost of tuition minus the financial aid you have already received equals the maximum amount that the PLUS loan can be. All PLUS loans are unsubsidized, so the borrower must pay all interest that accrues on the loan while in school (again, you don't have to begin paying back the loan or the interest until you have graduated, withdrawn, or fallen below part-time enrollment status). The FFEL PLUS Loan has a fixed interest rate of 8.5% and like all FFEL loans, you will be responsible to repay a private lender, not the USDE.
  • Direct PLUS Loans: the Direct PLUS Loan is similar to the FFEL PLUS Loan except for two important factors. 1. This loan has a fixed interest rate of 7.9% compared to the FFEL PLUS Loan's fixed rate of 8.5%. Therefore, if your parents are thinking of taking out a PLUS loan, the Direct PLUS loan has a lower interest rate and may be easier to repay. 2. This loan is distributed by the USDE and must be repaid to the USDE, not a private lender.

There are certainly other loan options, predominantly include loans from a private lenders (generally a bank). If you feel that your financial aid package is not adequate, you may consider private loans. Interest rates may vary and repayment plans may differ. If you choose to pursue a loan from a private lender, it's important to compare loan interest rates and repayment plans from a few different banks to find the best deal.