Many students find that their scholarships may not adequately cover all of their college expenses. On top of tuition and books, you will find that you may need to pay for parking, orientation, meal plans, housing, travel and other necessary items. Student loans can help fill the gap, but which one is right for you?

The FAFSA

The first step is to complete the Free Application for Federal Student Aid (FAFSA). Once completed, the FASFA can be sent to any institution you are considering for college. The information contained in your FASFA will determine your eligibility for federal student aid and help the school(s) assemble a financial aid package, which may include grants, scholarships, work-study programs and a recommended student loan amount. The school may suggest which loan is best for you, including those offered by the Federal Family Education Loan (FFEL) Program.

FFEL

The Federal Family Education Loan Program was created by Congress in 1965 and is administered by the U.S. Department of Education. This program has supplied over $500 billion dollars in low-cost loans to students and parents. It consists of the Federal Family Education Loan and the William D. Ford Federal Direct Loan (Direct Loan) Programs. There are several types of FFEL and Direct Loan Program loans available, including Stafford Loans and Parent Loan for Undergraduate Students (PLUS Loans). FFEL Program loans are funded by banks, credit unions, or other lenders that participate in the program. Direct Loan Program loans are funded directly from the federal government.

Stafford Loans

Stafford Loans have two categories, subsidized and unsubsidized. Subsidized loans are for students with financial need. The government pays the interest while the student is in school at least halftime, during the six-month grace period and during authorized periods of loan deferment. Unsubsidized loans are available to any student regardless of financial need, but students are responsible for all interest accrued.

PLUS Loans

PLUS Loans are typically taken out by parents, although graduate and professional students may also obtain this type of loan. Eligible parents or graduate students may borrow the total cost of an undergraduate or graduate education, minus any financial aid from other sources, such as grants and scholarships. However, a credit check is required and the borrower must qualify for the loan either alone or with an endorser (co-signer).

Private Loans

Another option is a private student loan or alternative loan. Generally, private student loans carry a lower interest rate than credit cards and can be used for other college expenses, such as housing or study abroad. Each lender has its own application forms to complete as well as its own requirements which may include a co-signer, a credit check and/or income-to-debt ratio check performed on the borrower, co-signer or both. These loans are not federally guaranteed and may take several weeks to process. Note: Private loans should only be used after all federal loan options are exhausted.

Finding a Lender

When it is time to choose a lender and a loan, don't choose blindly. You can consult the financial aid office at your college to find which lenders they recommend, or visit your local bank to inquire about any student loan products they might offer. Or, if you prefer, do some private student loan research on your own to find a lender that is right for you.