If you're committed to getting an education and eventually earning more money, educational loans may seem like going in reverse. However, student loans may be essential to completing your educational program without the stress of paying for it immediately.

It's possible to apply for a loan to pay your educational costs and postpone repayment of the loan until you are out of school. The Federal government pays the interest on Federal loans while you work on your degree, which gives you the opportunity to land that great new job before you have to repay your loan debt.

Perkins Loans
The Federal Perkins Loan is awarded by your school based on the information you submit on the FAFSA. If you qualify for the Perkins Loan, you have a nine-month grace period to repay the loan, no up-front fees, and a low (5%) fixed interest rate. Perkins Loans are generally offered to students with the highest financial need. See Perkins Loans for more information.

Stafford and PLUS Loans
The Federal Stafford Loan is the most common loan students use to finance their educational costs. The information you submit on your FAFSA helps your school determine your eligibility for this loan. The type of loan you receive varies depending on your income, dependent status, and student enrollment status.

The annual Stafford Loan limit for a freshman dependent on a parent or guardian is $2,625, and the annual loan limit for an independent freshman is $6,625. If you qualify for a subsidized Stafford Loan, the government pays the interest on the loan while you are in school and for a six-month grace period after you graduate, drop below half time, or leave school. Find more information on Stafford Loans here.

Parents of dependent students can also use the Federal PLUS Loan Program to borrow funds to pay for student educational costs. The Federal PLUS Loan offers an unsubsidized loan with a capped variable interest rate. See Federal PLUS Loans for more information.

Private Loans
Private loans are awarded by banks, companies like Nellie Mae, and other lending organizations. While Federal loans are guaranteed based on income reported on the FAFSA, private loan eligibility usually depends on a borrower credit check. Banks and other private lenders do not pay the interest on private loans, as the government does with Federal loans. Instead, the interest accrues but payment of interest and principle is deferred until the student has graduated or leaves school. Students attending expensive four-year institutions or law schools are most likely to take out private loans. Think of private loans as a way to supplement the Federal loans and other financial aid you have been awarded. See private loans for more information.