Education is an unavoidable part of life and often comes with a large financial burden. With increasing tuition costs, many prospective students and their families feel overwhelmed when considering all the expenses associated with college or an additional post-secondary education. To help with this, education loan options are available to finance higher education.

Federal loans are offered to US citizens and permanent residents and are considered to be the most attractive option due to some of the associated benefits, including lower, often fixed, interest rates and flexible repayment plans. Federal loans are typically disbursed directly to the student or their school, since they are issued by the US Department of Education. Additionally, the US government currently offers five separate loan programs including, Direct Subsidized and Unsubsidized Loans, Parent PLUS Loans, Grad PLUS Loans, and Perkins Loans.

Direct Subsidized Loans are loans issued to undergraduate students who demonstrate financial need. These loans are funded by the government, meaning that the student does not have to pay the interest while enrolled in school and for six months after graduation. These loans typically have lower interest rates than unsubsidized loans and are not affected by a student's credit score.

Direct Unsubsidized Loans are for undergraduate, graduate and professional students but are not based on a student’s financial need. With these loans, the interest begins accruing as soon as the loan is disbursed, so borrowers should think carefully before taking out this type of loan.

Parent PLUS Loans are available to parents of dependent undergraduate students. These loans do not require a specific credit score, but they are based on a credit check. Interest rates are usually higher than subsidized loans, but they provide an option to parents of dependent students who may not qualify for other types of loan programs.

Grad PLUS Loans are for graduate and professional students who need funding for school. Like Parent PLUS Loans, these loans do require a credit check to be eligible. However, the credit check isn’t as stringent as Parent PLUS Loans so more students may qualify.

Perkins Loans are low-interest loans available to undergraduate and graduate students with the greatest financial need. The interest rate is set at 5%, and no credit check is needed to qualify.

In addition to federal loans, private or alternative loans exist as an option to finance higher education. Private loans usually have higher interest rates than federal loans and require good or excellent credit scores to qualify. Private loans also require a co-signer on the loan to guarantee repayment of the debt if the primary borrower is unable to do so. These types of loans may have more flexible repayment terms, but they may not be as favorable as federal loans.

In summary, there are a variety of options when it comes to financing higher education, and a combination of federal and private loans may be the most reasonable way to do so. Knowing about loan options and their associated benefits and disadvantages is important for making the best decision when it comes to financing education.