Home » Pay for College Student Loans
Loans have to be repaid-even if you don’t finish school!
Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like a car loan. You cannot cancel this loan because you didn’t like the education you received, quit in the middle, or didn’t get a good job after school.
Federal Perkins Loans
Stafford Loans
PLUS Loans
Consolidation Loans
Private Loans
Federal Perkins Loans
Perkins loans are made through colleges and universities to students who have financial need. The maximum loan is $4,000 a year. The interest rate is 5%.
You apply for Perkins loans when you submit the FAFSA. The loan may be part of the financial aid package offered to you by the college.
Schools have a certain amount of Perkins money to loan to students each year. When it is gone, you are out of luck. This is another reason to submit your FAFSA early.
You will have to sign a promissory note that outlines the terms of the loan. You will also be required to participate in “entrance counseling.”
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Stafford Loans
There are two types of Stafford Loans:
- Subsidized: You must have financial need and be enrolled at least half-time. The federal government pays the interest while you are in school.
- Unsubsidized: You must be enrolled at least half-time. You don’t have to show financial need. You pay interest while you are in school.
The interest rate on Stafford loans is fixed at 6.8% in 2007. The amount of you may receive depends on what year you are in school and whether you are an independent or dependent student.
You will have to sign a promissory note that outlines the terms of the loan. You will also be required to participate in “entrance counseling.”
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PLUS Loans
Parents can borrow a PLUS Loan to help pay your education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. The maximum amount of this loan is calculated by subtracting all of your aid from the cost of attendance. The interest rate varies and is determined on July 1 of every year. The interest is not subsidized.
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Consolidation Loans
Consolidation loans allow you or your parents to combine multiple federal education loans into one loan with one monthly payment.
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Private Loans
When taking out a bank loan:
- Read all the documents (yes-it’s a lot!)
- Find out the essentials: monthly payment, interest rate, and years to repay.
- Ask about any terms you don’t understand.
- Ask if there is any grace period. Do you have to pay the loan while you are in school?
- Find out if the interest is fixed or variable. “Fixed” means that it will not change. “Variable” means that it may go up or down depending on some other rate.
- Ask about late fees.
- Don’t let anyone rush you. This is a big decision.
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How to find out more
- Apply online at your schools’ OCFAC lab or at
College Student Loans- For more on federal loans:
