College Loans Guide | Your Key Guide to Student Loans

College loans are usually how most people can afford a college education.

While there are many options for student loans available to everyone, it can be intimidating to select the best one for you. Even so, it must not get in the way of your education. As such, we’ve listed down several federal and private college loans you can check out to help you pay for college.

The first step to living your best life begins here!

(Pro Tip: Are you looking for a one-stop shop that covers all the basic elements of student loans? We’ve got you covered! From the breakdown of common terms, to understanding your own personal loans, the 2018 Grad’s Guide To Student Loans will explain everything that you need to know in the most simple way possible. Click to get your free guide, here.)

College Loans | Financially Securing Your Education

In this article:

Federal Perkins Loan
Federal Direct Subsidized Loan
Federal Direct Unsubsidized Loan
Federal Direct PLUS Loan
Alternative and State Loans

1. Federal Perkins Loan

The Federal Perkins Loan is one of the most common college loans in the U.S.

Any student with high financial needs can apply for this loan. The grants come from the federal government, allotting a budget for undergrads who need the help.

The fixed interest rate is as low as 5%, and there will be no charges for loan payments while you are studying.

The largest amount you can borrow from this loan is $27,500.

How to Apply:

If the government considers you as someone who is in need of educational financial aid, you may be eligible for the Federal Perkins Loan, if you are:

An undergraduate with financial need
Enrolled full-time or part-time at a university
Attending schools taking part in the Federal Perkins Loan Program

There is a maximum loan amount of $27,500 for undergrads AND $60,000 for graduate students.

But, the amount you receive is still subject to your financial need, as well as the school’s financial status. The interest rate is still fixed at 5%.

To apply, pick up the Free Application for Federal Student Aid form from your high school, library, or college. You may also call 1-800-4-FED-AID (1-800-433-3243) to apply directly.

How to Pay:

After your graduation, you will receive a nine-month grace period to give you time to look for a job. After the grace period, payment of your loan commences.

Unlike other student loan options, your loan servicer is likely the school you graduated from. Most times, the school will have a stand-alone organization to handle billing and collection. It is best that you ask your school about these terms.

Be careful not to skip payments or submit them late. Late charges and collection costs add up to your total amount to pay.

If you are still experiencing financial troubles after graduation, you may call your loan servicer and see if you are available for deferment or forbearance.

Some graduates and undergrads who choose to teach at low-income institutions may be eligible for loan cancellation entirely. So, it is an option you must keep in mind.

2. Federal Direct Subsidized Loan

The awarding of Federal Direct Subsidized Loans is on a need basis.

They have a low interest rate of 4.29%, which the government pays for while you are in college. What’s more, this interest rate is fixed and will not change over time, which is perfect for students with low income.

But, you can only borrow up to a certain amount for each of your college years, namely $3,500 for freshman year, $4,500 for sophomore year, and $5,500 for your junior and senior year.

How to Apply:

Students with financial needs are eligible for this loan. The fixed interest rate, as well as the government subsidy makes this the most affordable student loan right now.

To be eligible for this loan, you must be:

An undergraduate student
Have demonstrated financial need as per your FAFSA
A U.S. Citizen or National, or an eligible non-citizen
A high school diploma holder
Enrolled at least part-time in an eligible degree or certificate curriculum
No existing federal student loans
Able to meet the eligibility requirements for federal student aid

You will not be required to submit to a credit check or bring in a cosigner, nor will you need to have a separate loan application to be eligible for this loan.

To apply for this loan, you must complete a FAFSA form or Renewal FAFSA if you are a returning student.

Then, you must receive a financial aid award letter from the school financial aid office.

After that, you must contact that office to accept the aid and loans.

Lastly, you must sign documents such as a promissory note binding you to pay for the loan in time.

How to Pay:

For the Federal Direct Subsidized Loan, you will have a six-month grace period before you have to pay for your loan. Once that period is up, you are now responsible to pay for it.

Thankfully, your interest rate was subsidized by the federal government. So, you only have to shoulder the loan itself, which is a huge help for you when you graduate.

As with all loans, late or missed payments will have sanctions. You must be responsible with paying these loans, and of course, you don’t want to pay more than you need to.

If you run into financial trouble which causes you to not pay your college loans, inform your loan servicer. There will be flexible and affordable payment plans to help you through paying your debt.

3. Federal Direct Unsubsidized Loan

Unlike the subsidized loan, the government does not subsidize your loan with this one. This means you will have to pay off the interest yourself. The interest rate remains at 4.29%. Students like yourself can pay for these loans while in college, or add it to their total debt.

But, this goes without saying that you will be paying more money as time moves on.

The good thing about these types of college loans is you can borrow more money compared to Direct Subsidized Loans.

How to Apply:

These college loans are taken from the government’s Direct Loans program. These offer undergrad and grad students at low and fixed interest rates.

The unique thing about these student loans is it will not require you to be in a state of financial need, so you will be responsible to pay for all the interest that will add up over time as well.

To be eligible for this loan, you must be:

A U.S. Citizen or national, or be an eligible non-citizen
A holder of a high school diploma or equivalent
Enrolled at least part-time in an eligible degree or certificate curriculum
Not in default for any existing federal student loans
Eligible as per the requirements of federal student aid

You will not need to worry about credit checks, cosigners, or separate loan applications for this student loan. To apply for this loan, you must complete a FAFSA or Renewal FAFSA form, to be submitted to your school’s financial aid office.

After a time, you will receive a letter informing you of your financial aid award. Then, you must head over to your school’s financial aid office to accept the loan and sign the necessary paperwork.

How to Pay:

Paying the Federal Direct Unsubsidized Loan works just like the other two federal college loans.

This loan has the same six-month grace period as the subsidized loan. Thankfully, it gives you more time to get yourself set up before you start paying your loans.

As for when you start paying, your loan servicer will inform you about when your first payment is to be made.

Know that with a Federal Direct Unsubsidized Loan, you have the option to pay off the interest while you are studying. If you can afford to pay the interest off, do so. This will only help you out in the long run.

And, with all federal student loans, you have many repayment plans you can use to ease the burden of paying off your college loans.

4. Federal Direct PLUS Loan

The Federal Direct PLUS Loan allows your parents (as well as those in graduate school) to borrow the total cost of the college tuition.

The other aids you might have received will be deducted from these college loans, yet you have to note the fixed 6.84% interest rate. This might be a little steep, but it is still cheaper than many loans out there.

How to Apply:

The Federal Direct PLUS loan allows undergrad and grad students or their parents to help pay for college or graduate school.If you are not eligible for subsidized or unsubsidized loans, you might want to check this student loan out.

You are eligible for a Federal Direct PLUS Loan if you fall into these categories:

An undergrad/grad student enrolled at least part-time in an eligible school
Taking an eligible course
Currently a dependent of your parents/guardian
Have no adverse credit history
Meet general requirements for federal student aid

Just like with all federal loans, you or your guardians must apply for a FAFSA form, obtainable online or through schools and libraries.

How to Pay:

The Federal Direct PLUS Loan does not ask students to make any payments while they are enrolled in school.

Recipients of this loan also afford the student a six-month grace period before they have to pay.

If your parent or guardian applied for the Federal Direct PLUS Loan on your behalf, they are expected to start paying as soon as all loans are disbursed.

Deferments can be requested for an extra six months after the student graduates. No payments must be made while the loan is deferred. This is great for people who are currently struggling financially, as this gives them a six-month break before they assume the burden once more.

5. Alternative and State Loans

Besides federal college loans, other institutions allow students to borrow for college. These can be banks, private organizations, state institutions, and colleges themselves.

Note that you or your guardian might have to submit to a credit check. Most of these organizations must see good credit before they approve loans.

Also, you may find the interest rates on these loans can be pretty steep, which is why many students apply for federal loans instead.

How to Apply:

Unlike federal loans, these types of student loans can have different applications. They can also have differing eligibility requirements, depending on the amount you will need to borrow, or your credit.

Most of these loans will submit you to a credit check, which can be a problem if you are in financial need. Thus, you must only choose private or state loans if you did not qualify for the above federal loans.

6. Private College Loans

If you are ineligible for a federal student loan, or you are just looking for another option, you can check out private college loans instead. There are some good private college loan providers out there, but you might need to present proof of good credit or bring a cosigner to be eligible.

Citizens Bank

Citizens Bank gives out student loans ranging from $1,000 to $295,000, depending on what degree you choose to pursue.

Both undergrad and grad students are eligible for the loans.

Interest rates vary, as you can get a reduction if you already have an account with them. You can get further reductions if you set up automatic payments.

There are also options where parents/guardians share the payment with the student.

LendKey

LendKey offers loans that are funded by credit unions and community banks. You can choose to pay a minimum of interest-only payments or $25 per month if you are still in school.

There is also a grace period after graduation. Students still have the option to make full monthly payments if they so wish.

There is a student repayment option of 10 years, which can help ease the burden when you are just starting out.

College Ave

College Ave is one of the more popular private loan services for student loans.

There is no application or origination fee or and you won’t be penalized for paying your loan off early.

There are fixed and variable rates for those who struggle financially. If you set up automatic payments, there will be an interest deduction.

Undergrads and grad students can enjoy loans from $2,000 up to 100% of the school tuition, and there are repayment options that go up to 8, 10, 12, or 15 years. Furthermore, guardians and students can pay the loan jointly.

Sallie Mae

Sallie Mae loans not only apply to college students, but also for private K-12 students, career training courses, dental/medical school, MBA loans, and bar study fees.

This makes Sallie Mae a more robust option for you, depending on your circumstances.

There is no origination fee or an early payment fee. Also, they have interest rate deductions for those who set up automatic payments.

You can choose from either deferred, fixed, or interest-only repayment options while you are studying or during your grace period. There are also fixed and variable rates available for those who prefer a more flexible payment schedule.

CommonBond

CommonBond loan services charge a 2% origination fee but do not charge for the application.

There is no fee for early payments, and they reduce the interest rate for those who set up automatic payments.

Their loans are available to undergrads, MBAs, and grad students alike. You can take out a loan up to 100% of the school’s cost of attendance.

Also, you have several repayment options ranging from 5 to 15 years, as well as fixed and variable rates if you want a more flexible payment schedule.

Need some help figuring out how your college loans work? Here is a video from How to Adult:

Subscribe to US Student Loan Center

Expensive tuition fees must never get in the way of your education.

College loans are worthy investments that give you the potential to live a better life in the long run. There are many options out there for those in dire financial need, or those who just need a leg up.

Whether you choose a federal loan or a private one is up to you. We hope this guide helps you in choosing the college loans that are best for you and your future.

Do you know any private student loans that are great for low-income students? Tell us in the comments section.

Up Next: How To Pay Off Student Loans