Types of Loans

45 percent of public college students and 56 percent of private college students take out educational loans. Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and home mortgages.
There are four main types of loans that may assist you in paying for college:
1. Student Loans:
Stafford Loans: These loans can be subsidized (the government pays the interest while you’re in school and for six months after you leave school) or unsubsidized (you pay the interest from the date you receive the money, but you can defer payment until after you leave school).
Perkins Loans: These loans are campus-based, low-interest, fixed-rate loans for a certain amount per year for those with exceptional financial need. As long as your student is attending school at least half-time, you won’t have to begin repayment until nine months after you graduate. No interest is charged until repayment begins.
2. Parent Loans: These loans are fixed rate loans referred to as PLUS Loans and payment typically starts a few months after taking out the loan. They allow parents with good credit to borrow money at a favorable interest rate. PLUS Loans are limited to your cost of attending college minus your other financial aid. They’re not based on financial need.
3. Private Education Loans: These loans are often supplied by banks and terms vary according to the institution providing the loan.
4. Alternative Loans: These loans include Home Equity Lines of Credit, Mortgage Refinancing and a host of other options.
It’s best to talk to a college financial planner when reviewing all your financial options. Lighthouse Financial can assist you in determining what loans are right for your family’s situation.
Call Lighthouse College Planning at 630-859-2633 to discuss your situation. Our experts help our clients save $40,000-$60,000 in college expenses.
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