Private loans are typically offered through a bank and generally accrue interest on day one

• Subsidized federal student loans generally carry the most favorable terms, with fees and interest covered by the government while the student is enrolled. Subsidized federal student loans are made to students demonstrating financial need and generally do not require a credit check.
• Unsubsidized federal student loans may have less favorable terms, and are not limited to students with financial need. They generally do not require a credit check.
• PLUS (Parent Loan for Undergraduate Students) loans are made to graduate or professional students or parents of dependent undergraduate students. While eligibility is not based on financial need, a credit check is required. Borrowers with an adverse credit history must meet additional requirements to qualify. Payments on PLUS loans are typically not deferred while the student attends school.
• Consolidation loans allow you to combine your federal student loans into a single loan. However, consolidating your loans may result in losing certain borrower benefits, such as interest rate discounts, principal rebates, or some loan cancellation benefits.

This means that from the day you accept the loan, the money you owe for borrowing will start to add up. The longer you take to pay it off, the more money you’ll owe. A credit check is generally required for private loans.

Many schools participate in federal or state work-study programs, which allow students with financial need to earn money to pay for school through part-time jobs.

Different kinds of financial aid have different application requirements. Scholarship applications may be offered directly through a college or university, or through local organizations, groups, or clubs.

What kinds of financial aid can I get?

There are four main types of financial aid: loans, grants, scholarships, and work-study. In a given financial aid package, a student may qualify for multiples types of aid depending on how much financial need they (and their family) demonstrate and their academic merit. Most aid that comes from the federal government is based on financial need, while aid from other sources may be either need- or merit-based.

What are loans?

A loan is a sum of money borrowed from either the federal government or a private organization. The money is then used to help pay for school-related costs. Loans need to be repaid with interest. Federal loans offer more benefits and are more student-friendly than private loans.

• Federal loans: There is currently only one federal loan program: the William D. Ford Federal Direct Loan Program (Direct Loan Program). Direct Loans are managed by the U.S. Department of Education and allow undergraduate students to take out up to $12,500 annually, depending on a variety of factors. Financial need is not a prerequisite for all federal loans. For the most part, repayment doesn’t begin until you’ve completed school or dropped below half-time enrollment and interest is covered until this time as well.
• The Federal Perkins Loan Program, which provided loans to students with financial need, expired on . Perkins Loans were administered by individual institutions instead of the U.S. Department of Education. This program may be reinitiated at some point, but previous attempts to extend the life of the program did not make it through Congress.

• Private loans: These loans come from banks, credit unions, private companies, and even individuals. Their interest rates are higher than those of federal loans and dependent on the borrower’s credit score.
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