rment and forbearance. However, the downfall of federal loans is their relatively low limit. As of June 1, 2007, freshman undergraduates are eligible for no more than $3,500, sophomore for $4,500, and juniors and seniors for $5,500. For graduate students, the limit is increased to up to $12,000, depending on the type of federal loan and the area of study.
Federal loans fall under two broad categories. Subsidized loans are granted based on the financial need of the student in question, and for as long as you remain enrolled in college either full-time or half-time, no interest accrues while you study! Or rather, the federal government pays the interest for you. It's an amazing deal, because if you go start off borrowing $3000 to enter college, you owe $3000 and not a penny more by the time you graduate.
In other cases where the student fails to qualify, loans are unsubsidized. Interest does accumulate during your years in college; you are, however, still eligible for the six month grace period.
Federal loans come in many guises: Stafford loans, Perkins loans, Federal Family Education Loans, Ford Direct Student Loans. Each one is a bit different and targeted towards a different type of student, so it's a good idea to do some research and find out which one is the most beneficial to you.
Private students address the weakness of federal loans by offering higher limits, but also higher interest rates rates. While more significant than the interest rates charged by federal loans, they are nonetheless still lower than a nonspecific loan. Unlike federal loans, credit history does matter, and many private loans will require the student to fill out a FAFSA or some other application that provides the lender with financial information. Because of this reliance on the borrower's financial situation, many students who choose to take out a private loan will cosign with their parents in order to reap the benefits of their credit score and the subsequent lower interest rate. Depending on your family's situation, this could be a g