Student Loans & Financial Aid

Why Should You Apply for Federal Financial Aid?

For many college students, financial aid seems like a complex subject. Just like filing income tax returns, people dread the confusion of paperwork and deadlines. But try to remember what you effort is worth: free money. In fact, an afternoon's worth of online forms can equal thousands in cash for your college education.

According to the College Board's 2012 "Trends in Student Aid" report, the total volume of education loans disbursed doubled from $55.7 billion to $113.4 billion between 2001-02 and 2011-12. [1]

Still, some students aren't willing to do their federal aid homework. Instead, many borrowed from non-federal sources, like private banks and lenders. Unfortunately, the interest rates on private loans are higher, and repayment protections are fewer.

If you're heading back to college, read up on the following sources of federal aid. You might be surprised by how much funding you can receive.


  • 1 What Are the Different Types of Federal Loans?

    PLUS Loans

    PLUS is an acronym for Parent Loans for Undergraduate Students. The PLUS loan is available to the parent of a dependent student. (If your parents don't claim you as a dependent on their tax return, you are not a dependent student.) The Graduate PLUS Loan is available to graduate students, pursuing master's or doctoral degrees, who are enrolled at least half time.

    Stafford Loans

    Stafford Loans are federal loans that are available to undergraduate and graduate students. These loans can be need-based (subsidized) or non-need based (unsubsidized.) You will pay a fee of up to 4% of the loan, which is usually taken from the disbursed amount you receive. The interest rate on Stafford loans varies depending on the type of loans you received and when you borrowed.


    Federal Family Loan Education Program whereby Stafford and PLUS loans are financed by a private lender, such as Sallie Mae, but backed by the federal government. Students work with their school and the bank to secure the loan.

    Direct Lending: William D. Ford Federal Direct Loan Program Stafford and PLUS loans are available directly from the federal government, not through a commercial lender. Students work with their school in securing the loan.

    Subsidized Stafford Loan (Need-Based)

    • No interest charged while borrower is enrolled in school at least half-time, nor during grace or deferment periods. Interest on the loan begins with repayment.
    • Interest rate and fees apply.
    • Note: if you fail to make your scheduled loan payments, you may be charged collection costs and late fees.

    Federal Unsubsidized Stafford Loan (Non Need-Based)

    • Interest accrues while in school; the borrower is responsible for paying the interest at all times. You can choose to make quarterly interest payments while in school by contacting the Department of Education.
    • Interest rate and feeds apply.
    • Note: if you fail to make your scheduled loan payments, you may be charged collection costs and late fees.

    Perkins Loans

    Perkins loans are low-interest loans for exceptionally needy students. They are funded by the federal government and awarded by your college. Perkins Loans are repayable over a period up to 10 years, depending on the amount owed. They can be used for undergraduate or graduate study, and you do not have to be enrolled full-time to be eligible. The interest rate is currently 5%. You would repay the loan to the awarding college.

  • 2 Who Qualifies to Receive Federal Loans?

  • 3 How Do You Apply for and Receive Federal Aid?

  • 4 Why Apply for a Private Loan?

  • 5 How Do You Apply for a Private Loan?

  • 5 How Common Are Private Loans?

  • 6 Why Are Private Student Loans Less Desirable Than Federal Loans?