Student Loan Series: Types of Student Loans

When it comes to student loans there are a number of options for you to consider.  A variety of products exists in the student loan marketplace, both public and private.  The US Dept of Education offers Federal Family Education Loans (FEEL) or Direct Loans, which include Stafford Loans for students and PLUS loans for parents or graduate level students.  You might be wondering the same thing I was when I first read about these options, “what is the difference?”.  Simply put, FEEL loans are processed by a lender and Direct Loans come directly from the Dept of Ed.

Another phrase you must become familiar with while learning about student loan options is subsidized versus unsubsidized.  Subsidized loans entail the government paying your interest while you are in school, while unsubsidized loans you are responsible for paying the interest that accrues during the time you are in school.  Although this sounds like it may add up quick, and it does, most borrowers choose to let it accumulate and in turn add it to the principle of the loan.

Private loans are also commonplace when it comes to student borrowers.  There are many differences when comparing private loans, such as from banks and credit card companies, to the above noted loans.  You want to review the terms in great detail to ensure you are making the best decision for your debt future.  The big difference is that private loans are not need based which means you and your parents, if they are cosigning with you, must demonstrate good credit history.  In todays marketplace the loans interest rates are competitive and historically low with no repayment required as long as you are in school at minimum part-time.

Its worth mentioning that depending on where you want to work after college, there may be an entire subsection of loans specific to your desired field.  For example, if you want to be a teacher there are loans geared towards teachers with varying repayment and even forgiveness structures.  These loans typically require you to work in the field for the duration of the loan or until it is repaid forgiven.

[source: U.S. Department of Education].

Now that you have an understanding of what types of student loans there are out there, you can proceed to the next step of actually applying for these loans and working to accept the best awards you are presented with. Check back for the next installment soon!

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Edgar @ Degrees and Debt

AuthorEdgar @ Degrees and Debt

Founder of Degrees and Debt. Edgar just wrapped up his MS in Project Management with a focus on Information Security Management. Battling back to even from student loans, mortgage and credit card debt is an art Edgar is learning to master. This is his journey.

6 thoughts on “Student Loan Series: Types of Student Loans

  1. I say avoid student loans completely if you can. If not do your due diligence in terms of loan terms, interest rates etc. and only take the very minimum you need. Work as much as possible and then pay off the loans as fast as possible.

    • StudentDebtSurvivor Looking back now I would certainly do it different. Factoring in that I changed majors and such, I would have much rather started out at a school near home for the first few years then when I knew what I wanted transferred to a university I desired.  I would have saved multiple years of housing+food costs and much more!

  2. I’m not a big fan of student loans, it just seems like so much money for young people to have to come up with so early on in their lives.
    Also thanks for helping host the giveaway 🙂

    • MonsterPiggyBank Its very scary, but in all reality without some kind of student loans there simply wouldnt have been a way for me to earn my degree. With the amount of time I spent on my courses I would have had to work days and nights in which case my school would have suffered.

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