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For students and their parents, there is always a possibility of qualifying for student financial aid.  With a variety of loans and grants offered by the Federal government, private lenders, or the college or university you attend, there will be some form of aid available based on your family’s financial status.

Let’s take a look at the different types of aid currently available.

There are two types of Stafford Loans: FFELP (Federal Family Education Loan Program), and FDSLP loans which are obtained the government through “Direct Lending Schools.”

Under the heading of a Stafford Loan, there are two types - subsidized and unsubsidized.  The former allows for the government to pay interest while the student is in attendance, and the latter means the student can defer payment until after graduation.

For those whose financial needs are greater, you can apply for a Perkins Loan directly through the college or university.  It is a subsidized loan and one of the “perks” of this type of loan is that the interest is paid by the Federal government, with no default fees, a low interest rate, and you have up to 10 years to repay the loan.

In addition, there are four types of grants a student can apply for - The Pell Grant, the FSEOG (Federal Supplemental Education Opportunity Grant), ACG (Academic Competitiveness Grant), and the National SMART Grant (National Science and Mathematics Access to Retain Talent).

The difference between a grant and a loan is that a grant does not have to be repaid unless you leave school prematurely.

There are also two types of loans that parents can apply for - PLUS Loans and Consolidation Loans.  The former applies to undergraduate, graduate, and professional degrees, and the latter allows for multiple federal education loans combined into one payment monthly.

During this current recession, it has been noted that the interest rates for student loans may rise.  It has also been mentioned that although most student loans have not been affected by the economic crisis, it may be difficult to obtain consolidation loans.

The only way to determine if your son or daughter qualifies for either a loan or a grant is to begin the process early – as soon as they have been accepted into the college or university of their choice.