There are two types of loans: Federal and Private.
Federal student loans are provided by the government and have set terms and conditions defined by law. They offer benefits such as fixed interest rates and income-driven repayment plans, which are not typically available with private loans.
On the other hand, private loans are offered by private organizations like banks, credit unions, and state-affiliated entities. They have terms and conditions determined by the lender and are generally more expensive than federal loans.
These are the loan types:
Direct Subsidized Loan:
Available to undergraduates with demonstrated financial need. The loan amount depends on the number of years in school, starting at $3,500 for freshmen, with a fixed interest rate of 4.53% APR.
Direct Unsubsidized Loan:
Available to undergraduates, graduate students, and professional students without financial need. The loan amount increases each year of college, starting at $5,500.
PLUS Loan:
Available to parents of dependent undergraduates, graduate students, and professional students. PLUS loans have a fixed interest rate and require a credit check. Parents take out these loans on behalf of their children, and repayment must begin immediately without a grace period.
Direct Subsidized Loans:
Loans provided to eligible undergraduate students with demonstrated financial need to cover higher education costs at a college or career school.
Direct Unsubsidized Loans:
Loans available to eligible undergraduate, graduate, and professional students, regardless of financial need.
Direct PLUS Loans:
Loans offered to graduate or professional students and parents of dependent undergraduate students to cover education expenses not covered by other financial aid. Credit check is required, and additional requirements apply for borrowers with adverse credit history.
Direct Consolidation Loans:
Loans that allow you to combine eligible federal student loans into a single loan with one loan servicer.