Different Types of Education loans

Types of Education Loans for college
By Ari Kay, EducationLoans.org

High school graduates not only have to make the decision of what college or university to attend, or even if they want to go to college for that matter, but they also have numerous college loans to choose from. These college education loans help students pay for college and other expenses they incur while pursing a higher education. In general there are two types of college loans. One type of education loans are federally funded college loans. Most federal education loans are awarded to students who demonstrate financial need; however financial need is not the only requirement to receive Federal loans for college.

In order to be eligible for federal loans, students must at least be enrolled in an accredited college or university half time. Once a student drops down to half time status while they are attending college, they are no longer eligible for college education loans. For college loans, half time status means a student takes at least 12 credits a semester. Students also have to be a United States citizen in order to be eligible for federally funded college loans. Federal loans tend to be the most stable type of loan, therefore many students choose to take this route.

For federal college loans there are either student or parent loans available to help pay for expenses associated with higher education. Student college loans come in the form of Stafford loans, while parent college loans come in the form of PLUS loans. There are some differences between these college loans, however. One difference is that parental college loans allow parents to borrow more money than student college loans. Also, payments on parent college loans starts right away, where as payments on student education loans do not start until six months after college graduation.

The second type of loans comes into play when federal college loans do not cover the full cost of education. These types of loans are called private educational loans and they are also available to both parents and students. Private education loans have the similar benefits as federally funded loans, however there are some differences. The main difference is that private college loans tend to have a higher interest rate than federally funded educational loans. The terms and conditions of private loans typically vary depending on the lending institution providing the loan. However, a private education loan has competitive rates to stay within range of their competition and do not feature the strict application deadlines Federal loans do. Also, there is less paperwork with private loans as there is no FAFSA to fill out.

Private educational loans are also a benefit in that they can be applied to most all educational related expenses and often the check is sent directly to the student, or applicant, and not the school's financial aid/controller's office. Students should give serious consideration to spending some time to learn loan basics and compare as many college lenders as possible before filing out an application. Private loans are credit based and a credit check is performed each time an application is submitted, so be careful and do not submit multiple applications, especially within a short period of time.

To learn more about private education loan basics - visit www.educationloans.org