Doing away with federally guaranteed private loans whittled the three basic types of loans undergraduate students should know about down to two: federal loans made by the directly, and private or loans from banks or other private lenders that carry no federal government guarantee. (Sometimes a college itself may make loans, too, usually in partnership with a financial institution.)
There are two types of Stafford loans available to students. For those who demonstrate sufficient financial need, the government will pay the interest on "subsidized" Stafford loans for students while they are enrolled in college. Otherwise, loans accumulate interest while a student is in school, and the student may either pay that interest as it comes due or let it be added to the principal balance.
Families taking out PLUS loans can borrow enough to cover their full "cost of attendance" less any other financial aid, like scholarships or grants, that they receive. The cost of attendance is by law and is made up of more than just tuition and fees, and includes room and board, an allowance for books and supplies, transportation and other personal expenses. Every college should provide incoming students with its cost of attendance.
The simplest way to borrow may be directly from the federal government, through the William D. Ford Federal Direct Loan Program. But this option exists only for students attending a college that participates in the direct loan program. For students attending institutions that do not participate,around is a good idea.
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