The best student loan program is probably the government student loans. Government student loans have interest rates that are lower than private student loans. If you get approved for a subsidized loan, you only have to pay part of the loan amount because some of the loan is already subsidized and paid for you by the government. The following are the four federal student loan programs with the best lending terms.
1. Perkins Loans
Perkins loan is the best student loan to apply if you meet the eligibility criteria. Perkin loans can be applied by students who can demonstrate they have a significant financial need. To demonstrate a financial need means that you or your parents are earning much lesser than what the tuition fee requires you to pay. Perkins loan has a fixed interest rate of 5%. it does not automatically reset like the federal loans. You will have to start paying the interest fees while at school. It does not charge any origination fee so the loan amount that you receive is full.
2. Direct Subsidized Loans
Direct Subsidized Loans is another federal loan for students with significant financial need. Direct Subsidized Loans features a fixed interest rate of 3.76% and the interest is paid while at school. The student loan program is only available to students of an undergraduate program. Undergraduates can take out a loan of up to $5,500 per year and the total borrow must not exceed $23,000. There is a small origination fee of 1.068% for the loan.
3. Direct Unsubsidized Loans
Direct Unsubsidized Loans can be applied by all undergraduate and graduate students without having to fulfill the requirement of being in significant financial need. The interest rate of the Direct Unsubsidized programs for undergraduates is 3.76% and 5.31% for graduates. You can pay the interest during school. During grace periods, the interest rate will accrue. If you did not pay the interest rates that accrue in the grace periods, they will be added to the principal amount. If Undergraduates can borrow up to $7,500 per year and a total of $31,000 while graduate students can borrow up to $12,500 per year and a total of $138,500.
4. Direct PLUS Loans
Direct PLUS loans are for paying the excess amount that is not covered by other financial aid. The interest rate is filed at 6.31% and you can borrow the full excess amount after misusing the funds from other financial aids. You must have a good credit history to qualify for PLUS loans. If you don’t qualify for PLUS loans, you may be able to get more loans from the Direct Unsubsidized Loans program. PLUS Loans require the parents signature for undergraduate students. The origination fee can be expensive and costs 4.272% on each disbursement.