Student loans are readily available to fund a college education.

Different types of student loans address different financial situations.

Unfortunately, student loans are usually a necessity for a college education rather than an option. Fortunately there are a variety of student loans available and thousands of lenders for student loans.

Not many students can afford to fund college tuition without relying on some sort of student loans. Almost 70% of college graduates have debt and the average debt incurred with federal student loans is $17,000. This does not even reflect the debt incurred by parents.

Many students rely on student loans from the federal government to finance their educations. These loans have low interest rates and do not require credit checks or collateral. Student loans also provide a variety of deferment options and extended repayment terms.

A loan provided for students by the federal government is called a Stafford Loan. There are two types of these student loans:

• Student loans granted through the Federal Family Education Loan are provided by private lenders, such as banks, credit unions and savings & loan associations. These student loans are guaranteed against default by the federal government.



• Student loans arranged through the Federal Direct Student Loan Program are provided by the US government directly to students and their parents.

Stafford Loans are considered either subsidized or non-subsidized. The interest on subsidized Stafford student loans is paid by the government. Special financial need must be demonstrated to qualify for subsidized student loans. The payment of interest on the non-subsidized version is deferred until after graduation. The deferred interest is capitalized which adds the interest payments to the loan balance, increasing the size and cost of the loan. All students, regardless of need, are eligible for non-subsidized Stafford student loans.

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