College Loan

There are two main types of loan for college on offer, both targeted at different people for different reasons, if you are a student, then the loans of interest to you will be the Perkins loan and the Stafford loan.

Federal Perkins loan

The Perkins loan is only available to those students deemed to have exceptional financial needs, and so you will need to check with the school to find out if you are eligible for such a loan - the loan is available to both undergraduates and graduates, and has a low interest rate of just 5%.

A Perkins loan is administered through the school’s financial aid office, it will be them who issue the loan and it will also be the school who you will have to pay the money back to. The money lent does not come from the school, it is federal money that is used which is why this loan is often referred to as a federal Perkins loan. You will either receive the money in the form of two or more checks (the payment is split and paid over a period of time) or the amount will be deducted from your tuition fees directly by the school.

The amount that you are allowed to borrow under a Perkins federal loan is set at $4000 per year for undergraduates, with an upper limit of $20,000 in total. Besides the interest, there are no charges made on this loan unless payments are missed or received late, in which case there may be charges. Repayment of the loan will not begin until nine months after you leave school/college provided you are attending on at least half-time status, and in general you will have up to 10 years to repay the loan.

Federal Stafford loan

The Stafford loan is available to most students, the only requirements are that you are enrolled at least half-time, you have US citizenship (or eligible resident status), you have a satisfactory academic record and do not have any unresolved defaults on previous federal education loans.

There are two variations on the Stafford loan – subsidized and unsubsidized. The subsidized version require that you pass the eligibility criteria, and the interest on the loan is paid by the federal government, leaving the student to only pay the actual amount borrowed. You will need to complete the free application for federal student aid (FAFAS) form in order to be assessed for eligibility.

The unsubsidized version is available to all students that meet the previously stated requirements, and in contrast to the subsidized version, the student is responsible for meeting the interest payments as well as paying back the actual loan amount. As with the subsidized version, you will need to complete the FAFAS form to apply for this loan.

The loan amount will be sent to your school, which will then disburse the loan to you over at least two payments (usually in the form of a check) over the course of the year. You will be required to repay the loan to the authority, with repayments having to commence six months after finishing at the school, either through graduating or by dropping to below half-time, the maximum rate of interest on a Stafford loan is 8.25%. The amount that you will be able to borrow varies, for undergraduates the limits are $2,625, $3,500 and $5,500 for the first, second and third years respectively.

If you are looking for a loan for college, there are a number of companies that specialise in providing them, and who will be able to provide you with all of the details you required, see the links to the right of the page.

Loans UK is a specialist loans site, providing a useful resource for anyone interested in obtaining finance for any purpose.