MYTH: All loans are the same
FACT: All loans are NOT the same
Anytime you borrow money, you need to be smart about your decision.
- Understand the terms of the loan.
- Know how much it will cost you to repay the loan.
- Pay attention to how much loan funding is included in your college financial aid offers
- Learn about the different types of loans that are offered.
Here are four types of loans you may see in a financial aid package:
Subsidized Loan
A loan based on financial need for which the federal government generally pays the interest that accrues while the borrower is in an in-school, grace, or deferment status, and during certain periods of repayment under certain income-driven repayment plans.
Unsubsidized Loan
A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan.
PLUS Loan
A loan available to graduate students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest regardless of the loan status.
Private Loan
A nonfederal loan made by a lender such as a bank, credit union, state agency, or school
