My child is trying to decided between two different colleges. One college is offering a federal loan
the other is offering a Stafford loan? What is the difference between the loans. Do you have to accept the loan package that is given, would it be best to make one loan through a Sallie mae .
The federally funded student loans are called either Stafford Loans or Direct Loans. The amount for a freshman is max $5500.
The other federally funded student loan is a Perkins Loan, which can be received in addition to the Direct or Stafford Loans. Perkins Loans are for low income students at that college.
It is very possible these are the same loan…with a different name.
In addition to those two, there could also be a federal Parent PLUS loan.
All loans are optional. No college can force you to take out a Stafford loan or any other loan, federal or private.
Without more information there’s no way to really determine which loan would be work for you; for example, there is a type of Stafford loan that is subsidized (which means that the federal government pays the interest on it while the student is in college and for a while after they graduate). The Perkins loan has the same issue. The Parent PLUS loan and unsubsidized Stafford loans accrue interest immediately and the PLUS loan actually enters repayment immediately after it’s disbursed (you don’t get to wait until the student graduates, though you can elect that feature if you want).
The federal loans also have different interest rates, origination fees (if any), and other features so if you are comparing those (or the Parent PLUS) to a Sallie Mae loan you would need to research that information and possibly make some estimates depending on you (the parent’s) credit history and what kind of loan you could get privately.
@corytaffy…are these loans for your student (Stafford, Direct or Perkins)…or are they loans for YOu (the parent…Parent Plus Loan)?
It is hard to answer your question without this information!