Financial Aid: Different Ways of Saying IOU to the Government

Federal student loans may be the cheapest money you will ever borrow, but they still cost money by accumulating interest over time. The good news is there are ways to make the burden of student loans less significant, with a variety of loan options that adjust to family finances and make a college education possible. Non-PLUS loans are loans taken in the student’s name, and have a limit of 5,500 dollars for a student’s freshman year, the limit increasing to 6,500 dollars the student’s sophomore year and 7,500 dollars the student’s junior and senior years. Non-PLUS loans are usually available to students whose parents are not financially able to take out PLUS loans, making these types of loans for families with financial circumstances that inhibit parents from holding a loan in their name, such as bad credit or bankruptcy. Perkins loans can be taken out by students according to their need and the student’s cost of attendance at the institution of enrollment, making the value of the loan vary from student to student. As discussed in the previous blog, Parent PLUS loans are an unsubsidized loan taken out by parents with good credit, where payments on interest must be made while the student is in college; however, these loans come with a low interest rate at 4.292 percent and do not have limits like a loan taken in the name of a student.

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