Student Loan Types and the Application Process

Introduction to Student Loan Types and the Application Process

When people think of college, the cost immediately comes to mind. In most high schools, 11th and 12th-grade students get coaching and college preparation courses. Your family could have started a college fund when you were younger. However, you are probably going to have to take out some student loans to cover what your college fund doesn’t. This article will cover how you go about applying for student loans. We’ll also touch on various student loan types and what their restrictions are.

Student Loan Types - What are the types of student loans?

Different Student Loan Types

If you’re just starting to look into student loans, the first thing you should do is research. There are several different kinds of student loans available, and each one has their own guidelines. We will go over a few different loans, along with how you apply for them. We will also talk about their eligibility and credit score requirements.

Parent PLUS Loan

Parent PLUS Loans are loans that a student’s parents apply for. These loans are designed to help parent’s pay for college. A borrower doesn’t pay anything back until the grace period is up. This grace period lasts for six months after the child graduates from college. This loan comes with a 7.9 percent fixed interest rate. This loan will be paid off over a ten-year span. You will get charged a four percent fee every time you take a new loan of this type out. This loan comes with no maximum amount you can borrow; it just has to cover tuition costs.

Perkins Loans

A Perkins Loan is a Federal loan that students who have shown to have considerable financial hardships can apply for. These loans are classified as subsidized. A subsidized loan means that the borrower will pay nothing on them while they are in school. There is also a nine month grace period after the borrower graduates before they have to start repaying. There is a ten-year repayment plan on this loan as well. The Perkins Loan comes with a five percent fixed interest rate. If you’re an undergraduate, you can borrow up to $5,500 per year. There is a maximum amount you can borrow as an undergraduate of $27,500. If the borrower is a graduate, they can borrow up to $8,000 per year. The most you can borrow from both of these combined amounts is $60,000 throughout your college career.

Stafford Loans

One of the most popular student loan types is the Stafford Loan Program. These loans come right from the Federal Government. They have a Federal Direct Student Loan Program, and this is where the money comes from. This program splits the Stafford Loan program into two separate categories. They are known as a Subsidized Stafford Loan, and an Unsubsidized Stafford Loan.

Subsidized Stafford Loan. If you choose the Subsidized Stafford Loan, your repayment period won’t start until six months after you graduate. While you’re in school, the Federal Government will pay your interest on your loan. This loan has an interest rate of 3.67 percent. The program is set up on a graduated system. A first-year student can borrow up to $3,500. A second-year student can borrow up to $4,500. Finally, third and fourth-year students can borrow up to $5,500 each year. The maximum amount you can borrow throughout your college years is $23,000. To be considered for this loan, you have to prove you have a financial hardship. Your family also can’t make more than $50,000 in combined income per year.

Unsubsidized Stafford Loan. If you pick an Unsubsidized Stafford Loan, you pay the interest while you are in school. The interest rate can go up to 3.67 percent, and you won’t pay on your loan balance until after you’re out of school. There are no special eligibility requirements for this loan. You can borrow anywhere from $5,500 to $12,500 while you are in school.
How to Apply for Student Loans and Tools to Help You
When you start to apply for your student loans, you will need things to help you do it correctly.


The main thing you’ll use when you apply for your loans is the FAFSA or Federal Application for Student Aid. The FAFSA is how you will apply for any of the loans we talked about earlier. The website also has a lot of useful information like a college cost sheet and critical deadlines. Before you start filling out this form, you will need some information from your parents or guardians.

You will need:
Documents that Prove Their Combined Yearly Income like Tax Papers
Current Addresses
Dates of Birth
First, Middle, and Last Names
Phone Numbers
Social Security Numbers

You will also need the specific school code you would like your loans sent to. Once you have all of this information, you can begin the application process. It will give you a step by step guide on how to complete it. Once you finish and submit the FAFSA, you will get a letter in the mail. This letter will have the loan amounts you’re approved for listed. It will also have how much your school will cost, along with a space asking you to accept the loans. You can choose to reject any loan you want or take them all. The loans will be applied to your tuition once you send a reply. The program will deposit any money that is left over into your bank account. You are supposed to use this leftover money for any additional school costs.

2. College Savings Calculator.

The second thing that will give you an estimate of your college costs is the College Savings Calculator. Parents or guardians are supposed to use this calculator if they want to plan for a college fund. The earlier they start saving, the better off they will be in the long run. The parent can input any information that is relevant to your situation. You start by putting your child’s current age in along with the amount of the monthly deposit. Next, add the tuition costs, and take inflation into consideration as well. Once you do this, the calculator will tell you how much you should put away each month. This will give you a rough estimate of how much money you’ll need to cover most of the tuition costs.

This article has talked about several different student loan types. We have also talked about each loan’s restrictions and requirements. We talked about how to apply for these loans and some tools to help you. If you’re just starting this process, this article can guide you through.

Monica Kowollik


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