So, you have made the decision to attend college? That's great news! Now, you just have to figure out how to pay for it. The cost to attend a college or university continues to rise - to the point that is is impossible for the majority of us to pay for schooling with cash on hand. Don't despair - there are numerous sources of funding that can help you obtain your dream of higher education.

Federal Student Loans

There are several student loan programs offered by the federal government (U.S. Department of Education). In order to apply for these loans, the student will have to complete the Free Application for Federal Student Aid (FAFSA). Once completed, the student will receive notification of how much financial aid they can receive, including how much they can borrow in federally-subsidized loans and non-subsidized loans. The interest rates on federal student loans are set by Congress, and are subject to change.

Perkins Loan

Students that demonstrate exceptional financial need can quality for a Perkins student loan. The federal government gives the money to participating schools, who then lend the money to qualifying students. These are typically the lowest-rate loans, but there is a limited amount of funds available for the Perkins Loan program each year.

Stafford Loan

The Stafford Loan is the most popular type of federal student loan. Stafford loans can be both subsidized and non-subsidized. The school the student plans on attending will determine how much loan the student qualifies for, and what portion of loan funds will be subsidized (government pays interest while the student is in school) and non-subsidized. The student will pay an origination fee (1% of the loan amount as of July 2013), which can be deducted from loan proceeds.


The PLUS Loan is a federal loan that a parent can take out to help pay for their dependent child's qualifying educational expenses while they are obtaining an undergraduate degree, and for students seeking a graduate degree. The parent that contributes their financial information to the FASFA form can apply for the PLUS loan. Parent eligibility for the PLUS loan is based on credit-worthiness. If the applying parent gets turned down for the PLUS loan, the dependent student can request for additional funding from a Stafford Loan. Parents will have to pay an origination fee for the loan (4% as of July 2013). The origination fee can be added to the loan balance.

Private Student Loans

Private student loans are issued by financial institutions, are not backed by the federal government, and do not require the student to submit a FASFA. Lenders that offer private student loans have fixed rate and adjustable rate options. The interest rate charged on the loan will be based on credit-worthiness. To increase the chances of getting a lower interest rate, the student can have a parent co-sign on the loan. Many lenders to do not charge origination fees on private student loans, but they often have interest rates that are higher than those available on federal loans.