Deciding on which student loan to apply for can be a headache for both parents and students. With so many aspects to consider, such as repayment plans, interest rates, and loan benefits, deciding on the best loan for you can be both confusing and difficult.

If a student is not eligible for federal loans, or is already taking the maximum, there are other loan options to consider. There is a variety of private student loans to choose from, or you and your parents may consider a Parent PLUS loan. However, these loans have some important differences to be aware of.

The most important aspect when choosing between a parent PLUS loan and a private loan is the borrower. A parent PLUS loan is taken out in the parent’s name and the responsibility legally rests on the parent to repay it. A student and parent can have an agreement where the student pays the loan, but remember, if it were to go into default, it is under the parent’s name not the student’s and is therefore the parent’s responsibility. Private loans, however, will be taken out in the student’s name and all repayment responsibility falls upon the student.

Another important difference to consider is financial disclosure. Private student loans do not require any parent or student information like which you would put on your FAFSA. On the other hand, Parent PLUS Loans require you to file a FAFSA which means you will have to provide financial information.

There are a number of other options to consider when deciding on a loan. Visit StudentLoans.com for more information on this differences between Private Student Loans vs Parent PLUS Loans.

Can’t remember how much of your graduate school tuition will be covered by a Stafford Loan? Want to know when your next PLUS loan disbursement will arrive? You can access all of your federal loan details online through the Department of Education’s National Student Loan Data System (NSLDS) database.

The NSLDS database contains all of the information on your loans when funds have been disbursed. You can find details on  Stafford loan,Perkins loans, Pell grants and Plus loans. Simply log on to http://www.nslds.ed.gov/. To enter the database, you will need your four digit FAFSA pin.

If you are a recent graduate, once your grace period comes to a close, you will be tasked with repaying your federal student loans. While many people opt for standard repayment, there are actually alternative means as well -  if you are eligible.

Graduated repayment- Graduated repayment allows you to make lower payments at the beginning of repayment with the payments gradually increasing over time. Payments are generally put toward interest only in the first few years. Eligibility for a graduated repayment plan varies depending on loan type, interest rate, and outstanding balance.

Income-based repayment - Monthly payments are based on a percentage of your monthly gross income. Typically you can be eligible for income-based repayment if your monthly payments are greater than 10% of your gross income.  Find out if income-based repayment is right for you.

Extended Repayment - Extended Repayment provides eligible Federal Stafford and PLUS borrowers with payment relief through a lengthened repayment term of up to 25 years. To be eligible, you must have a total outstanding balance of eligible student loans that exceeds $30,000.

Have more questions about Stafford loan repayment? Fire away in our Financial Aid forums.

Imagine waking up tomorrow and discovering you don’t need to pay back your federal Stafford, PLUS and Perkins loans. For many Americans, that dream is a reality, thanks to a number of programs that allow you to have some, if not all, of your loans forgiven.

Aside from applying for a loan discharge, which is available only under extreme circumstances, some career paths and post-graduate options will cover the cost of repaying your student loans. Here is an overview of some of the careers that may take advantage of those options:

Public Service Employees: If you work full time in a public service position, and make 120 payments (approximately ten years) on your loans while employed, you may be eligible to have the remaining balance forgiven. Public service positions include law enforcement officers, early education teachers, public librarians, emergency medical technicians and more.

Volunteers: Many volunteer organizations offer stipends and loan forgiveness options if you provide a certain number of hours of service. For example, AmeriCorps will offer $7400 in stipends on top of $4725 to be used toward your student loans, as well as partial cancellation of your Perkins Loan in exchange for 12 months of service. The PeaceCorps and VISTA also offer similar forgiveness options.

Teachers: Under the National Defense Education Act, full-time teachers in an elementary or secondary school for low-income families may be eligible to have as much as 30% of their Perkins Loan forgiven.  Contact your school district’s administration to see which schools are eligible.

Lawyers: Sorry, the ambulance-chasers on TV aren’t eligible. But many law schools will forgive the loans of students who serve as a non-profit or public interest attorney. For more information, contact the National Association for Public Interest Law at  1-202-466-3686. Or, contact your law school’s financial aid office.

Physicians: Physicians who agree to practice for a certain number of years in economically depressed areas may be able to get some of their medical school loans forgiven by the National Health Service Corps. Check with your state agency for similar programs.

There are other options for repaying your student loans, including income-based repayment, forbearance and deferment. For more information on these options, visit our student loan repayment page.

If you are not eligible for any of the aforementioned repayment options, you might consider student loan consolidation, with can turn multiple loans (federal or private) into a low, single monthly payment and possibly lower your interest rate. For more information on student loan consolidation, visit our help page.

ScholarshipPoints code: 4GIVELOANS

Image credit: kelly ann t on Flickr.

The Parent PLUS Loan, a lending option through the federal government for students, is one of the less understood and often forgotten funding methods for education.

What is a PLUS loan? The Parent PLUS Loan is a lending program designed differently than other federal loans to cover more expenses than Stafford or Perkins loans, up to full cost of attendance. In addition, as the name implies, a parent or legal guardian is the only person that can take out this type of loan. The maximum borrowing amount is determined by the following formula:

Amount You Can Borrow = (Total Cost of Attendance) – (Awarded Federal Need-based Aid)

Essentially, the school tells the government how much it costs to go there (with reasonable margins for books, etc.) and whatever loans or grants you receive from filing your FAFSA are deducted from that total amount. Also, it is important to note that the PLUS loan is not a need-based program, so it is subject to a credit check. A PLUS loan is similar in operation to a private student loan, but has lower fixed interest (in most, but not all cases) and more generous repayment terms.

How does it work? First, there are two potential sources of Parent PLUS loans: the Direct Loan program, and the Federal Family Education Loan Program (FFEL). The major difference between the two are interest rates, fees, and who you pay back. The condensed version of the story is FFEL usually is more expensive for the student than the same product from Direct Loan.

At this point, you’re probably wondering why anyone would want to use FFEL for loans if they end up costing more (I know I did) — the answer is it isn’t a choice. Each college decides whether or not they want to be a Direct Loan or FFEL school, and the difference is often dictated through soft benefits and relationships between the school and lenders. So unfortunately, you don’t really have a choice and must go with what the school offers. That being said, there have been a lot of studies, blogs, and commentary that point toward FFEL lenders as being more forward about educating their borrowers about the real costs of education and doing everything in their power to prevent delinquencies and defaults during repayment.

The last difference between the two programs is to whom you send your checks. Direct Loan is funded and maintained by the US Department of Education, so you are directly borrowing your money from the federal government. FFEL is actually maintained by third-party lenders such as Discover Student Loans, and your money goes to them upon repayment.

What is the benefit of a PLUS Loan? A PLUS Loan can be a valuable method of bridging the gap between federal aid and total cost of attendance. More often than not, your federal award package, based on your FAFSA application, will not be sufficient to entirely cover your school expenses.

What does one cost? FFEL has a higher fixed interest rate of 8.5% for PLUS loans, where Direct Loans are currently set at 7.9% APR. Also, FFEL typically has higher fees than Direct Loans, up to 4% of the total loan amount. Like an unsubsidized Stafford loan, interest begins to capitalize or build right after the funds are sent to your school. You have the option to begin paying it off immediately, or you can postpone for either 2 months from the last disbursement, up to 6 months after the student’s graduation.

The PLUS loan is limited in some ways, because it is restricted to being taken out by a parent or legal guardian. If you are an older student, or just don’t have a solid relationship with your family, the PLUS loan just may not be the right solution. If you still need money for your education, and this type of lending is unobtainable, check out a private student loan, which is a little less restrictive, at the cost of being more expensive in the long run.

One last thing — if you are an undergraduate student, or a parent seeking one, you do not have to file a FAFSA to qualify for a Parent PLUS Loan. It is highly recommended, but not required. However, if you are a graduate student, a FAFSA is required to qualify for a PLUS loan.

ScholarshipPoints Point Code: PLUS2010

If you’re like me, you probably were at least somewhat confused the first time you looked at your financial award letter. “Stafford Loans”, “Perkins Loans”, “PLUS Loans”, what does it all mean?! Well friend, I’m glad you asked!

Each type of loan has a special purpose, so I’d like to break it all down for you and we’ll start with with the most common one, the Stafford loan.

Stafford Loans

To get started with these puppies, there are two different kinds of Stafford loans: subsidized and unsubsidized. The difference between the two is all about the interest; subsidized loans have a lower fixed interest rate of 4.5% for the 2010-11 academic year (meaning you pay less money over the course of the loan) and actually don’t start accruing interest until your six month grace period after graduation is over.

Unsubsidized Stafford loans begin to build interest (currently at 6.8% fixed) immediately after disbursement, which means that they snowball like private student loans. The nice thing about Stafford loans though is if you can afford to, you have the option of paying off the interest as it accrues while you’re still in school without any penalties. The end result is you pay a lot less interest over the life of the loan, and save yourself a pile of money. If you can’t afford to pay the interest while you’re in school though, don’t worry too much… you’re still getting a bargain on the interest rate compared to most private student loans out in the market.

Perkins Loans

A Perkins loan is a special type of low-interest product (5% fixed, as of 2010) intended for students with exceptional financial need. Although your need for the loan is determined based on your FAFSA, your school actually is the entity that decides whether to give you the money or not. Every year, the Federal Government grants participating schools with a certain amount of funding meant for Perkins loans, and each school can choose to lend only those funds, or add some of their own to the pool for financial assistance to their students.

If you ever write an appeal notice to your financial aid department at school, this, along with any school-sponsored scholarships or grants, is likely what they would consider you for to increase your award. One thing to consider that is a little odd for this particular type of loan is that since the school is your lender, you actually will receive the repayment bill from them instead of the government. Due to this, there can be different billing cycles… for instance, it isn’t unheard of to only be billed for this type of loan once every four months instead of monthly.

PLUS Loans

The PLUS loan is the last type of lending that the government offers to students and families, and is meant to bridge the gap between your Stafford, Perkins awards, and your total cost of attendance. Unlike the other two, the PLUS loan requires a credit check, much like a private student loan. There is a quirk though, in that if the parent does not pass the credit check, a friend or relative can actually co-sign on the loan. The APR of this loan changes every July, but will never exceed 9.0%.

As a side note, all the loans above are available to both undergraduate AND graduate students. As always, the best types of financial aid you can get are scholarships and grants (since you don’t have to pay them back!), and there are tons of resources available to find them like StudentScholarshipSearch and ScholarshipPoints. However, the subsidized Stafford loan is definitely the best option you can get as far as student loans go, and will cost the least over the course of your repayment.

*Credit Images to “Cmiper” on Flickr

ScholarshipPoints Code: MYSTERYGONE

With the news that MEFA (Massachusetts Education Finance Authority) is not able to make loans this year, (see: http://tinyurl.com/5soc5g)  Massachusetts residents will be looking for funding options.  We are happy to reassure our customers in Massachusetts that the Student Loan Network has a full suite of federal and private student loan products for funding this coming semester.  In addition, we offer a variety of credit tools, student loan resources and educational guides to help you through the financial aid maze.  For a list of these resources, visit: http://www.studentloannetwork.com/resources/

Financial Aid Professionals looking for options for their students, please visit:

http://www.studentloannetwork.com/financial-aid-professionals/

I’m a big fan of the life-blogging service Twitter, and thought I’d share some of the more recent comments about the FAFSA here, along with “director’s commentary” of sorts.

JanetIs: Glad the FAFSA isn’t due until the 30th.

@Janetis: Actually, the sooner you can file it, the better. There’s a limited amount of “free money” available each year, and once it’s gone, it’s gone. It’s allocated on a first come, first served basis.

andyduss: FAFSA can suck it!

dUbiAsIti: uuuuuuuuuuuuuuuuuuuuugh, i hate filling out the FAFSA! even when the gov’t has prefilled my answers and it’s easy as pie, i still HATE IT…

donkeypoof: importing music/FAFSA/nebraska driver’slicense?!

unsympathetic: finally filling out my FAFSA

bvaughn: Just finished my FAFSA for next semester… let’s see if the gov’t will give me any money to go to school!

@bvaughn: Don’t just wait on the government. Go find some money yourself – check out our free scholarship search book!

brandanger: wednesday got up cameto class had class til 11:35 work on FAFSA work on homework go out to eat with a friend

twistedmentat: Did my FAFSA. Sorry, Financial Institution, there ain’t no WAY yer squeezin’ eight large outta me.

mmemaledicta: Ok, so here’s what pisses me off about the FAFSA: They ask you for the totals of all accounts. What if rent hasn’t cleared? BS.

@mmemaledicta: They do ask you for the totals of all accounts, but that’s as of the day you file. If you know your rent will clear in a day or two, you can hold off filing the FAFSA until your rent has cleared and your checking account is back to normal.

craftyminx: FAFSA… Knew i forgot something

jeffmckown: Filling out the FAFSA sucks.

hyakurin: Watching CNN. Bored. Worried about FAFSA ******* me on my loans.

@hyakurin: There are a couple of loans, such as the PLUS loan, and private student loans, which do not require the FAFSA at all. If your award letter and student aid report come back with meager results, look into these loans, too.

merrickmonroe: @valor26: maybe not the school (yet), but FAFSA hq should watch out!

If you’ve got questions about the FAFSA, please ask! We’re here to help.

The FAFSA blog is sponsored in part by:

Five most recent FAFSA form help blog posts:

Subscribe to RSS headline updates from:

As of July 1, 2008, interest rates will be changing on federal student loans such as the Stafford loan. Here’s a quick rundown of the details:

For new Stafford loans:

• Subsidized: 6.0%
• Unsubsidized: 6.8%

For Stafford loans older than July 1, 2006:

• In grace period: 3.61%
• In repayment: 4.21%

For PLUS loans older than July 1, 2006:

• All older PLUS loans: 5.01%

If you’re just filing your FAFSA now, be aware that loan limits have increased as well; you’ll receive additional details from your school’s financial aid office in your award letter and financial aid package.

People say to me Dave, because that’s my name, they say Dave can I have a portion of my federal Stafford or Plus loans forgiven? That’s when I hit high gear and impress them with my ready knowledge and quick wit.

I figured since I’ve been fielding this question a lot recently it might be a good idea to publish the bible you see below for your benefit. Bathe in my knowledge.

Stafford and PLUS Loan Discharge and Cancellation Summary Chart

Information provided by the Department of Education.