Basics of Four Kinds of Student Loans

A college education is a terrific investment that's usually worth temporarily going into debt for and worth the hassle and paperwork required to get a student loan. Student loans have low, federally subsidized interest rates and are given regardless of the quality of your credit, although students must make satisfactory progress toward their degree. These loans enable borrowing at a below-market rate. Four common kinds of student loans are Federal Direct, Stafford, PLUS Direct, and PLUS loans.

Federal Direct and Stafford Loans

Federal Direct loans involve the federal government loaning money to students through the financial aid office of the college. Borrowing limits depend on your year in school, whether you're an undergraduate or graduate student, and whether you're financially dependent on your parents or guardians. Limits are lowest if you're a freshman dependent and highest if you're a graduate student independent from your parents or guardians.

Stafford loans involve private lenders, such as credit unions, giving money to students. Interest on them is deferred while students are in school, which makes them attractive. You can learn more about these loans at

PLUS Direct and PLUS Loans

PLUS Direct loans involve the federal government loaning money to parents through the financial aid office of the college. The amount of money parents can borrow depends on their credit and the budgeted cost of education minus other financial aid received. So, PLUS loans might enable you to borrow more money than Federal Direct and Stafford loans allow. However, you have to begin repaying PLUS loans immediately.

The difference between PLUS Direct and PLUS loans is that private lenders, such as credit unions and banks, make the latter. You can learn more about these loans at

How Do I Get Started?

To apply for any of these loans, first consult your college's financial aid office. They can help you fill out the financial aid form and find a lender. Also, check out the websites I mentioned to help you determine which kind of loan is most advantageous for you.


Work Cited: Keown, Arthur J. Personal Finance: Turning Money into Wealth. 4th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2007. 200-201. Print.

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Darla Word

About Darla Word

I'm a writing tutor and editor from Michigan. My favorite subject to write about is writing because making better writers is my calling. I also enjoy reading, singing, swimming, and cardmaking.

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