Student Loans

A student loan is a form of financial aid that must be repaid, with interest. The fact that they must be repaid makes them different from scholarships and grants. These types of loans come in three major categories: student loans, parent loans and private loans. 

Student loans offer no payments while enrolled in at least half time status. Once a student drops below half time status, the account will go into a 6 month grace period. If the student re-enrolls in at least half time status, the loans will be deferred, but when they drop below half time again they will no longer have a grace period.

Parent loans have a much higher limit — usually enough to cover any gaps in the cost of education. However, there is no grace period: Payments start immediately, and the parent is the one responsible for repayment, not the student.

Private loans also have higher limits, with no payments until after graduation, although interest will start to accrue immediately. Private loans may be used for any education related expenses, or to supplement federal loans, grants and other forms of financial aid.

Federal law sets the maximum interest rates and fees that lenders may charge for federally-guaranteed loans. Since nothing prevents a lender from charging lower fees, many offer a variety of discounts to attract borrowers.