Student loans

Read each item to learn more about student loans — where to find them, how to apply, and how to repay.

U.S. government loans

Federal Perkins Loans are low-interest loans offered through schools. Federal Stafford Loans were offered through banks, credit unions, non-profit student loan providers, or directly from the federal government through schools until September 30, 2017. Under federal law, schools can no longer make new Perkins Loans.

Federal PLUS Loans for parents allow a parent to borrow up to the entire cost of their child’s education, minus any other aid, either from a private bank, a non-profit lender, or the federal government.

The two types of Federal Stafford Loans
Subsidized Stafford loans are awarded based on the student’s financial need. A key benefit of a subsidized loan is that the government pays the interest as long as you’re in school at least half-time.

Unsubsidized Stafford loans are not awarded based on financial need; you are, however, responsible for paying all of the loan interest. To reduce the long-term, overall cost of the loan, it’s a good idea to begin paying this interest while you’re still in school.

What’s the interest rate on federal loans?
The interest rates for federal student loans are set by the U.S. government. To help make higher education possible for more people, the rates offered are “below-market,” meaning that they’re usually a bargain compared to interest rates offered on non-federal loans.

How do I apply for a federal loan?
Visit the Web site www.studentaid.ed.gov for information on federal student aid and a link to the Free Application for Federal Student Aid (FAFSA). You can complete your FAFSA online and electronically sign it. This is a quick, easy alternative to paper documents and allows you to know your eligibility for student aid faster. Keep in mind that the federal government makes changes to its student loan programs from time to time, so check the Web site for the latest information.

State loans and private loans
Many state governments offer student loans. Check with your state to see what they offer. If you’ve already applied for federal and state student loans and you still need to borrow more, you may want to consider a private student loan, also known as an alternative student loan. These loans are made by financial institutions and are based on the applicants’ credit.

When do I need to repay?
When you sign a loan agreement, or promissory note, you make a commitment to repay the loan on a schedule. Some lenders may offer more than one option for the repayment schedule or a grace period before your first loan payment is due. With a Federal Perkins Loan, you must begin repaying nine months after you graduate, leave school, or drop below half-time status. With Stafford loans, you must begin repaying six months after you graduate, leave school, or drop below half-time status.

Can repayment be postponed?
If you have a temporary financial hardship, some lenders may give you the option of postponing repayment of the loan for a period of time (known as a deferment) or temporarily reducing the amount of the student loan payment (known as a forbearance).Discuss these options with your lender.

Note: To be able to comfortably repay your student loans, try to keep your monthly payment at 10% or less of the net monthly income you plan to earn after you finish school.

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