Does Your College Aid Package Include a Loan?

According to, more than $100 billion in federal education loans and $10 billion in private student loans are originated each year. Of course, the terms of various loans can vary greatly.

  • Stafford Loans are federal loans that come in two varieties: Subsidized (based on financial need) or unsubsidized. Subsidized Stafford loans have a lower interest rate than the unsubsidized loans and interest doesn’t start accruing until after graduation. Unsubsidized Stafford loans start accruing while the student is in school, but payment can be deferred until after graduation.
  • PLUS Loans are designed for parents and interest rates are usually higher than other types of federal loans.
  • Perkins Loans are made through the schools and interest does not begin to accrue until after graduation.

To compare various loans’ terms, you can use the Loan Comparison Calculator at And remember that if your aid package includes a loan with a very high interest rate, you can decline that part of the package.

Inevitably, evaluating financing options prompts the question: How much college debt is too much college debt? Getting a sense of national averages may help you to answer that question. Using data from the 2007-2008 National Postsecondary Student Aid Study (NPSAS) conducted by the National Center for Education Statistics at the US Department of Education, offers the following table showing the percentage of students borrowing and the average cumulative debt per borrower (excluding Parent PLUS Loans) at graduation according to type of educational institution.

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