• Parent Plus loans: This loan is distinct from the other loans offered by the federal government. Under this category, the parents instead of the pupils receive the loans. The application process resembles that of a conventional bank loan; loans are authorized based on the applicant's credit score. These loans may be used for tuition and other expenses, such as textbooks and supplies.
• Subsidized Stafford loans: Students receive these loans based on their financial priorities. Under this category, pupils from low-income families are prioritized over others. The government is responsible for paying the interest on the student loans until they graduate.
• Unsubsidized Stafford loans: These loans are available to all students regardless of their financial circumstances. In contrast to the subsidized category, the interest on this loan option remains unclaimed until the student graduates and begins repaying the principal.
However, except in rare instances, it is unheard of for government student loans to fall short of covering the enormous costs of a college education. This is precisely why students must also seek out private loans to finance their education. Private loans can actually bridge the gap between the high cost of college and the limited quantity offered by government loans. Although private loans are more expensive than government loans, their flexible repayment options make them more convenient for students.
However, in the majority of instances, eligibility for private loans will depend on credit scores. On the other hand, the terms of government loans are significantly superior than those of private loans; therefore, private loan options should be considered only after all other options have been exhausted. While federal loan interest rates remain fixed, private loan interest rates will continue to fluctuate; however, private loans will have options such as deferred repayment that federal loans do not.
Therefore, students and their parents only utilize private loan options when federal aid is insufficient to cover the costs. While the rules for federal loans are significantly more relaxed, private loans can assist students by covering their entire college expenses.
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