If you’re applying to schools for a nursing degree, you know that education costs a lot of money. Luckily, schools and the government offer financial aid in the form of student loans, grants, scholarships, or even work study. But all aid is not the same – even loans are actually vastly different. You need to know the difference.


If you have already filled out the Free Application for Federal Student Aid (FAFSA), then you might have already started receiving notification about what kinds of government aid you could receive, some of which is probably a mix of student loans.


A loan is money borrowed that you are agreeing to pay back under certain terms and conditions. Student loans are one of the biggest ways schools can help you out so that you don’t have to pay the entire tuition at once.


All loans aren’t the same, however, so make sure you know exactly what kind of loan you are agreeing to before you sign for it. You want to find out the amount of the loan, the interest rate charged on the loan, the amount of time you have to pay back the loan, where you send the payments, and if you have a grace period before your payments must start after you graduate, leave school, or attend school less than the half-time plan that is usually required.


What does each loan really mean?


According to Federal Student Aid, an office of the U.S. Department of Education, there are many loans available, but each has slightly different borrowing and payback terms, interest rates, and regulations.

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You might notice these loans listed on your letter:


Direct Subsidized Loan


These federal loans are for undergraduate students who qualify based on need. A subsidized loan does not charge interest on any of the money you are borrowing while you are in school or during the deferment period which is typically several months after you graduate, leave school, or are considered less than half-time status. That means, if you’re in college for four years, you can continue to borrow and no additional interest will be charged to you during that time.



Direct Unsubsidized Loans


Unlike subsidized loans, the unsubsidized loans have an important difference. These federal loans charge interest from the very first signing and they are not based on financial need. If you borrow the money, you’ll be charged interest even while you’re still a full-time student. Your repayment, however, can wait until you graduate.


Direct PLUS Loans


Graduate students and parents of undergraduate students have less access to loans that are as forgiving on interest rates. PLUS loans are like the unsubsidized loans for undergraduates as they start accruing interest charges from the outset.


Direct Consolidation Loans


When you have student loans from a lot of different places, it’s sometimes tough to keep all the terms, conditions, and payback straight. Consolidating your loans, or creating one loan by combining all the smaller loan amounts and terms, can help.


Federal Perkins Loans


This low-interest loan is for students with a demonstrated financial need and is managed by the school. A Perkins Loan doesn’t begin a repayment plan until nine months after you graduate, leave school, or attend less than the required half-time status.

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Bank Loans or Private Loans


Bank loans are historically more expensive because they generally charge more interest and the payback often doesn’t take your income level into account. So borrowing $10,000 at a bank loan rate of 18.5 percent is going to be more expensive than paying back that same loan at today’s Direct Loan rate of 4.29 percent or even today’s PLUS Loan rate of 6.84 percent. Some bank loans require repayment plans that begin regardless of whether you’re still a full-time student or are working.


Student loans help many students pay for college, but not all loans are created equally and you have to know what each entails before you agree to the terms. When you’re thinking about how much you can realistically borrow, it helps to know what the total amount plus interest will look like as a monthly payment over a certain number of years. Check out the government’s Repayment Estimator for an idea of what your loan repayment might look like after graduation.

Julia Quinn-Szcesuil
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