Student loan types: Understanding different types of student loan
📊 Student Loan Types: At-a-Glance Comparison
🔵 FEDERAL STUDENT LOANS
Icons: 🛡️ (Government Shield) + 🎓 (Graduation Cap)
1. Direct Subsidized Loans
- 💰 For: Undergrads with financial need
- 📉 Interest: Govt pays while in school (4.99% fixed)
- 🎯 Max: $5,500-$12,500/year
2. Direct Unsubsidized Loans
- 🌐 For: All students (no need required)
- 📈 Interest: Starts immediately (4.99% undergrad / 6.54% grad)
- 🚀 Max: $20,500/year (grad)
3. Direct PLUS Loans
- 👪 For: Parents/Grad Students
- 💳 Credit Check: Yes (7.54% fixed)
- ⚠️ Risk: No borrowing cap – borrow responsibly!
✅ Federal Perks:
- Loan forgiveness programs
- Income-driven repayment
- No payments until graduation
🟢 PRIVATE STUDENT LOANS
Icons: 🏦 (Bank) + ⚠️ (Warning Sign)
Key Features:
- 📉 Rates: 3%-14% (variable/fixed)
- 🔍 Credit Check: Required (cosigners common)
- 💸 Repayment: Often starts immediately
When to Use:
- 🚨 Federal loans maxed out
- 🏫 Non-accredited programs
- 🏃♂️ Need fast cash (minimal paperwork)
🚩 Risks:
- No forgiveness options
- Rigid repayment terms
- Rates can spike (variable loans)
🟡 KEY COMPARISON
(Side-by-side table)
| Feature | Federal Loans | Private Loans |
|---|---|---|
| Interest Rates | 4.99%-7.54% (Fixed) | 3%-14% (Variable/Fixed) |
| Credit Check | Only for PLUS | Always Required |
| Cosigner Needed? | Rarely | Usually |
| Repayment Start | After graduation | Often immediate |
🚨 WHY CHOOSE FEDERAL?
✅ Lower fixed rates
✅ No credit history required
✅ Bankruptcy protection
✅ Death/disability discharge
(Visual: Green checkmarks vs. Red X’s for private loans)
💡 PRO TIPS
- Max federal loans first
- Use StudentAid.gov loan simulator
- Avoid private loans for undergrad degrees
(Footer)
Source: U.S. Department of Education, 2023 rates