Student Loans - Types

Student Education Loans is quite important for college students because its going to decide their future career.

There are five types of loans available for student expenses:

1. subsidized (based on financial need, and the government will subsidize the interest charges until education is completed)

2. Unsubsidized (no financial need, interest accrual starts immediately)

3. Direct PLUS loans (Parent Loan to Undergraduate Student)

4. Private loans and

5. Home equity loans.


-- Financial Need Student Loans

This type of student loan has a low interest rate and is from the federal government for students with financial need. The interest rate in this type of loan doesn't begin until the student has begun repayment of the amount thus making it easier and cheap if compared with other student loans.

-- Non-Financial Need Student Loans

This is quite similar to the financial need student loan, the only difference is that it is not based on the financial need of the family and the interest rate starts while the student is still in school.

-- Federal PLUS (Parent Loan for Undergraduate Students)

This type of student loan is not based on the financial needs of the student. The parents of the child could apply for this type of student loan. It also doesn't consider the family's income or asset when applying for a student loan. The amount of eligibility is based on the educational expense minus other loans, grants and scholarships t he student qualifies for.

-- Private Loans

The ones that are offering this type of loans are usually companies, banks, and financial institutions. These firms provide private student loans for both undergraduate and graduate students. The interest rates in this type of loan are actually high so it is not really recommended for students to choose this type of loan.

-- Home Equity Loans and Lines Of Credit

In this type of student loan, a home equity loan or line of credit is the way homeowners pay for your college education. One possible advantage here is a tax deductible interest.