Types of Educational Loans

Types of Educational Loans

There are many ways to get funding for your education; one of the most widely used resources is a federal or private loan.

Federal Direct Loans
The Federal Direct Loans are the most common type of federal student financial aid loan, and require the completion of the Free Application for Federal Student Aid (FAFSA). There are two types of Federal Direct Loans.

Unsubsidized Stafford Loan
An unsubsidized Stafford Loan is not based on need. Students are responsible for the interest that accrues on an unsubsidized loan from the date of disbursement. No payments are required on any Stafford Loan until 6 months after you drop below half time enrollment (if you have not yet used the grace period) which is 3 credits for graduate students. If possible, you may want to pay accrued interest on an unsubsidized loan while you are enrolled, as every dollar that you pay is an above-the-line tax deduction.

Federal Direct Graduate PLUS Loans
Students who need additional resources beyond what is offered by the Stafford loan program may borrow Alternative or Graduate PLUS loans up to their Cost of Attendance minus any other aid that has already been accepted. Graduate PLUS loans do not require payment until 45 days after you drop below half time enrollment. Like the Stafford Unsubsidized loan, interest accrues from the date of disbursement, and you may want to pay accrued interest while enrolled. Graduate PLUS loans are not based on your credit score, but may be denied due to adverse credit items such as bills in collections, bankruptcy, foreclosure, etc. If you are denied credit for a PLUS loan, you will have the option to obtain a credit-worthy endorser.

Alternative Student Loans
Some students may need additional loan funds after maximizing their federal loan options, or may not be eligible for federal loans and still need to borrow towards their education. Many lenders offer private loans to help students pay for tuition and fees and other educational costs.

Students must either meet the credit criteria of the loan for which they are applying or have a credit-eligible co-signer. Many of these loans also require a minimum of half-time enrollment (3 credit hours for graduate study) per semester.

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