Education and Your Money

The cost of college tuition rises every year. Between 1995 and 2015, the average tuition and fees at private national universities jumped 179 percent, out-of-state tuition and fees at public universities rose 226 percent and in-state tuition and fees at public national universities increased a staggering 296 percent, according to “U.S. News and World Report.”

About 70 percent of students require additional money to attend college. Here are loan options for the 2016–2017 school year.

Federal Perkins Loans

Need-based
Current interest rate: 5 percent (fixed)

These are low-interest loans awarded by a college or university to undergraduate, graduate and professional students with the greatest financial need. The school is the lender; not all schools participate. Payments begin nine months after graduation, leaving school or dropping below half-time status. The maximum a student can borrow as an undergraduate is $5,500 a year, or $27,500 total. This total can increase to $60,000, including graduate studies.

Federal Direct Subsidized Loans

Need-based
Current interest rate: 3.76 percent (fixed)

These loans are often called subsidized Stafford Loans. The U.S. Department of Education pays the interest while the student remains in school (at least half-time), for the first six months after the student leaves school, and if accepted, during deferment. Students are eligible if they attend a four-year college or university, community college, or trade, career or technical school. A student can borrow no more than the amount of school-determined financial need up to $3,500 freshman year, up to $4,500 for sophomore year and up to $5,500 each for junior and senior years.

Federal Direct Unsubsidized Loans

Non need-based
Current interest rates: 3.76 percent (fixed, undergraduate), 5.31 percent (fixed, graduate)

Often called unsubsidized Stafford Loans, with these loans the student is responsible for paying the interest during all periods, but can defer interest while in school and during grace periods, deferment or forbearance periods. The decision to defer paying interest will result in a higher loan balance. Students can borrow more money with these loans than with the Federal Direct Subsidized Loans.

Federal Direct PLUS Loans

Non need-based
Current interest rate: 6.31 percent (fixed)

These loans allow parents, graduate students and professional students enrolled at least half-time to borrow the entire cost of attending college, less other financial aid received. If you are a parent borrower, you’ll generally be expected to start making payments once your loan is fully paid out. However, you may request a deferment while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school or drops below half-time enrollment. A good credit history is required.

Private and State Loans

These loans from banks, colleges, state agencies and other private entities often require a good credit history and have higher interest rates. They generally offer fewer options, such as deferment or forbearance and income-driven repayment plans, than federal loans.