For nearly all education funding options, from grants and scholarships to  

student loans

  and work study, your first step is to apply for financial aid via the FAFSA (Free Application for Federal Student Aid). Doing so will determine your financial need and eligibility - in other words which aid you qualify for, and how much you'll need to borrow.

No matter your financial situation (unless you're super rich, that is), there's a good chance a portion of your education will be financed by student loans. In fact, according to the National Postsecondary Student Aid Study (NPSAS), about two-thirds (65.7 percent) of seniors graduating from four-year degree programs do so with some loan debt, averaging close to $20,000 worth!

Guess now is a good time to school yourself on the student loan lowdown, huh?! Here's a breakdown of loan types to get you started:

Need-Based Student Loans - Prove you need it and it could be yours.
Federal Perkins Loan:: These are the best loans for students since interest rates are quite low (currently 5 percent), however, they also have the most stringent income qualifications.

Federal Stafford Loan (Subsidized): These Stafford loans are ideal since interest rates are low (they vary each year but cannot exceed 8.25 percent). Also, interest doesn't begin to accrue until six months after you leave school (as a graduate or otherwise) since the government basically waives the interest bill on your behalf. You may borrow between $3,500 to $8,500 per year, depending on your grade level.

State Loans: State-sponsored loans and their terms vary. Research your home state's offerings, and if you plan on attending college in another state, you may qualify to apply there as well.

Non-Need Based Student Loans - Extra cash help for anyone who needs or wants it.
Federal Stafford Loan (Unsubsidized): Similar to the subsidized, except interest begins to accrue as soon as the loan is disbursed - and Uncle Sam won't help you. However, students can choose to make interest payments during college or defer them until six months after they leave school. The maximum amount that can be borrowed is $3,500 to $20,500 (less any subsidized amounts received for the same period), depending on grade level and dependency status.

PLUS Loan (Parent Loans for Undergraduate Students): Parents can borrow up to the annual total cost of attendance. New rates are set each July but cannot exceed nine percent. Repayment generally begins 60 days after the loan is disbursed.

Private Student Loans: Organizations and banking institutions offer private loans. These are often used to bridge the gap, provide a cushion for living expenses, etc. Rates, repayment plans, and borrowing limits vary, so be sure to do your homework and read all the fine print.
For more information on Federal student loan programs, call 1-800-4-FED-AID or visit www.FederalStudentAid.ed.gov.

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