Federal student loans are sponsored by the government and account for the largest chunk of education loans. There are 3 main federal loan programs: The Perkins Loan, The Stafford Loan, and The Parent Loan For Undergraduate Students, also known as PLUS.
The Perkins Loan is the most low-cost student loan, with an rate of interest of 6% and low fees. But it is also the most difficult to get because it is only given to those who need it the most. And the loan limit, at $3000, is the lowest of all three federal student loan characters.
The Stafford Loan comes with a variable interest rate that is higher than the Perkins, but lower than the PLUS Loan, due to the cap at 8.25%. As with the Perkins Loan, this student loan doesn't hold credit worthiness against the applicant. The Stafford Loan also has a much higher loan limit and is provided to both graduate and undergraduate students.
Compared to the Perkins and Stafford Student Loans, which are borrowed in the student’s name, the PLUS Loan is totally different in that it's a loan for parents of dependent undergraduate students. A great reward of this character of student loan is that it covers any remaining balance not covered by other forms of aid – in essence the loan limit covers your entire educational expense.
Nowadays that we have adjusted ourselves with the different characters of federal student loans, allows discover the attributes of a private student loan. This is a loan from a financial organisation that allows your creditworthiness, not your need for aid. Your credit is reviewed by lenders and if approved, you are able to get a substantial size student loan in minutes, sometimes up to $30,000. A downside to private student loans is that repayment terms generally cap at 15 years, compared to 30 years for a federal loan. Besides, whenever you become disabled or deceased, your heirs are required to payoff your student loan, whereas in a federal loan, the loan is forgiven, creating refund unneeded. And you can save your money.
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