Five Types of Student Loans for College

Here's a quick review of the five types of student loans for college with pros and cons for each type of financial aid for school.

Perkins
Best federal government need-based loan for students.
Pros: Lowest fixed interest rate. No fees. Credit history not a factor unless you are in default on prior student financial aid loans. Subsidized, so interest doesn’t start until after graduation.
Con: Funding limited to those with greatest need.

Stafford
Most common federal student loan.
Pros: Fixed interest rate better than PLUS loan. Can be subsidized depending on need. Repayment is more flexible for disability or job loss than most private loans.
Con: Limit on how much can be borrowed using this loan.

PLUS
Most common federal parent loan. Also used by grad students.
Pros: Fixed interest rate. Can cover full cost of attendance minus other aid.
Cons: Subject to credit approval. Not as good a deal as Perkins or Stafford.

Sponsored
Provided by some colleges, states, employers and scholarship groups.
Pro: Can be better deal than some federal loans.
Con: Harder to find. Ask around and use scholarship directories.

Private
Provided by banks and credit unions independent of federal system.
Pro: May cover expenses beyond aid award.
Cons: Subject to credit approval. Read the fine print — some private loans may compete with PLUS loans but some are way more expensive than federal loans.

Christine MacDonald is an education reporter who recently paid off her student loans.