Introduction

You may be a student loan borrower, but you’re probably not just one kind. Whether you’re taking out loans for yourself or your child, different student loans are available to meet your needs. Here’s a look at the main categories:

Federal student loans

Federal student loans are available for students who have financial need. Unlike private loans, students with a credit history can also qualify for federal student loans. The interest rate on federal student loans is determined by Congress. so it’s lower than other types of debt like credit cards or auto loans. However, the interest rate will increase by 1% every year you don’t pay off your loan in full; this is called capitalization (or capitalization rate). You may also be charged late fees if payments are not made on time and get into default status (which means no more payments will be accepted).

Federal student loans have flexible repayment terms that allow you to choose what works best for your budget:

• Graduated repayment: Your monthly payment increases every two years until it reaches its final amount at graduation 
• Income-driven repayment plans: These plans base your monthly cost on how much money you make each month rather than how much money was borrowed

Private student loans

Private student loans are not federally subsidized, and they’re offered by private lenders. These loans can be used at any school, but they’re not guaranteed by the federal government. That means that if you default on your payments or fail to make them on time, there will be no help from Uncle Sam–you’ll have to pay off your debt yourself!

Private lenders charge higher interest rates than federal student loans because they don’t have as much protection from default; if you stop paying them back (or don’t start paying them back), nothing stops them from going after you for collection purposes.

Direct subsidized loans

Students who demonstrate financial need are eligible for subsidized loans. They’re also the only type of federal student loan that doesn’t require a credit check, so you don’t have to worry about your credit history when applying. As a result, subsidized loans are generally more accessible than unsubsidized ones; however, they still come with annual limits based on income and cost of attendance at most schools (and sometimes even less).

Subsidized loans can be used for living expenses, books, and school fees while in school–anything other than tuition! Interest doesn’t accrue on these loans while you’re still enrolled as an undergraduate student; however, interest will begin accruing once you graduate or drop below half-time enrollment status (6 credits per semester).

Direct unsubsidized loans

Direct unsubsidized loans are awarded on a need-based basis, but they’re not based on financial need. Instead, these types of loans are disbursed by the availability of funds at the time of disbursement. That means if you qualify for Direct Unsubsidized Loans and apply for them early enough in your academic career (or even before), you could get less money than someone who uses them later in their academic career when there’s more money available overall.

Direct Unsubsidized Loans can be used as long as you’re enrolled at least half-time and meet specific other requirements:

Parent PLUS loans

Parent PLUS loans are federal student loans for parents. They’re not based on the student’s financial need and come with the same interest rates as other federal student loans. The interest rate is fixed, so it won’t change while you’re paying off your loan.

Grad PLUS loans

Grad PLUS loans are a type of federal student loan that’s available to graduate and professional students. You can borrow up to the total cost of your education minus any other financial aid you receive. These loans come with an interest rate fixed for the life of the loan–no matter when you take it out or what happens with rates in future years.

If your parents have provided documentation proving financial need, they may also be eligible for parent PLUS loans.

Perkins loans

Perkins loans are low-interest federal loans for students with exceptional financial needs. You can borrow up to $5,500 per year, and the loan amount is determined by your school’s office of financial assistance.

Perkins loan eligibility is based on your FAFSA results: If you have an EFC above a specific limit (currently $54,000), you won’t be eligible for this type of funding. However, if your EFC is below that number and/or if you have other types of aid that cover all or most of tuition costs at your institution (like scholarships), then Perkins may still be available to help cover living expenses such as room and board or books.

Refinancing student loans

Refinancing student loans is a way to lower your interest rate.

If you’re interested in refinancing your student loans, there are a few things you should know:

• The best way to find the best refinance rates is by shopping around. This can be done through websites like LendingTree or Credible. You may also want to contact local banks or credit unions directly; they offer better rates than big banks and lenders online.
• You’ll need good credit for this process to go smoothly–if not excellent credit! If yours could be better, consider improving it before applying for refinancing through one of these companies (you could start with paying down any outstanding balances on other types of debt).
• When using online through one of these sites or directly with a bank manager/employee at their branch office location nearest where both parties live now vs. where they were born originally (since most lenders require proof that the applicant has lived continuously within state boundaries since birth), make sure all the necessary documents are sent over email attachment format. Hence, no one loses anything during transmission errors caused by bad weather conditions affecting cell phone towers’ ability to pick up signals from distant locations far away from each other due to such lousy weather conditions being localized phenomenon only affecting small areas around large cities such as New York City due cold fronts making air denser thus lowering temperatures causing precipitation clouds form overhead creating raindrops falling downwards towards earth surface causing flooding issues near coastal regions where most people live today instead.

Consolidating student loans

Consolidating student loans combines multiple federal and private student loans into one new loan.

The benefits of consolidating your student debt include:

• Simplification: Instead of having multiple payments due each month, you’ll have just one price to make each month. This can help keep your finances organized, especially if you’re paying off multiple loans at once or juggling other bills like rent and utilities. It also makes it easier for lenders to track their borrowers’ progress toward repaying their debts (which can affect whether or not they qualify for further financial assistance).
• Reduced interest rate: When consolidating, some borrowers may be able to secure lower interest rates on their combined debt than they could if they refinanced their existing debts individually through another lender such as SoFi or Earnest–though this depends greatly on what type of consolidation program they choose; see below!

In-school deferment

In-school deferment is a temporary postponement of payments. You can use this option while in school, training, or unemployed.

You can also use in-school deferment if you are serving on active duty with the military and need to suspend payments for some time due to your service obligation.

Forbearance

Forbearance is a temporary postponement of payments. It can last up to 12 months, but it’s not the same as deferment (which we’ll discuss in a minute). If you qualify for forbearance, your loan servicer will grant it if they believe that you’re experiencing financial hardship and would be unable to make your monthly payments. This does not mean that your balance will go away–it just means that you don’t have to worry about paying them off for now!

For example: If I have $10k in student loans with an interest rate of 6%, my monthly payment would be about $560 after taxes and fees are deducted from my paycheck every two weeks. However, if I’m unemployed or only working part-time hours due to family obligations like caring for an elderly relative or raising children full time while their parents work two jobs so that they can afford rent each month…then maybe those aren’t realistic options right now? Instead, I should focus on making sure everyone else has enough food on their plate before worrying about my own needs. In this case, I could apply for forbearance through Federal Student Aid, suspending all collections activity while still allowing me access.

Income-driven repayment plans

Income-driven repayment plans are an option for borrowers who want to keep their payments low but have severe drawbacks.

To qualify for an income-driven repayment plan, you must demonstrate financial hardship by completing the Department of Education’s (DOE) Federal Student Aid Income-Driven Repayment Plan Request form. The DOE will then determine whether you’re eligible based on information provided by the state and other documentation it requests from you.

Income-driven repayment plans are available under federal and private loans, though not all lenders offer them simultaneously or with the same terms and conditions. These options include:

• Pay As You Earn (PAYE)
• Revised Pay As You Earn (REPAYE)
• Income-Based Repayment (IBR)

Conclusion

Student loan debt is a massive burden for many Americans, and it can be even more challenging to pay off if you need to figure out what kind of student loans you have. In this article, we’ve outlined some of the most common types of student loans and how they work. You might have one or more types of loans yourself – but whether it’s an unsubsidized federal loan or one from another lender like Sallie Mae (or even your parents!), options are available for everyone.