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With little or no profit to be made in the federal loan arena, some smaller lenders are exiting the business, while others are shifting their focus to the more lucrative private loan industry. Others, however, are curtailing even their private loan originations. (Tami luhby, CNNMoney.com senior writer)

Federal Perkins Loans
A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need. Federal Perkins Loans are made through a school's financial aid office. Your school is your lender, and the loan is made with government funds. You must repay this loan to your school. Your school will either pay you directly (usually by check) or apply your loan to your school charges. You'll receive the loan in at least two payments during the academic year.

How much can I borrow?
You can borrow up to $4,000 for each year of undergraduate study (the total you can borrow as an undergraduate is $20,000). The amount you receive depends on when you apply your financial need, and the funding level at the school.

Other than interest, is there a charge for this loan?
No, there are no other charges. However, if you skip a payment, if it's late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs.

When do I pay it back?
If you're attending school at least half time, you have nine months grace period after you graduate, leave school, or drop below half-time status before you must begin repayment. If you're attending less than half time, check with your college or career school to find out how long your grace period will be.

Stafford Loans (FFELs and Direct Loans)
Schools generally participate in either the FFEL or Direct Loan program but sometimes participate in both. Under the Direct Loan Program, the funds for your loan come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. Eligibility rules and loan amounts are identical under both programs, but repayment plans differ somewhat.

How can I get a FFEL or Direct Loan?
For either type of loan, you must fill out a FAFSA. After your FAFSA is processed, your school will review the results and will inform you about your loan eligibility. You also will have to sign a promissory note, a binding legal document that lists the conditions under which you're borrowing and the terms under which you agree to repay your loan.

How to Choose and Evaluate Lenders
You'll need to choose a lender if you obtain a FFEL Stafford Loan. (If you have a Direct Stafford Loan, the federal government—through the U.S. Department of Education—is your lender.) Schools that participate in the FFEL Program will usually have a list of preferred lenders. Student loan borrowers may choose a lender from that list, or choose a different lender they prefer (for example, a credit union). Here are a few things to think about when selecting a FFEL lender.

How much can I borrow?
It depends on your year in school and whether you have a subsidized or unsubsidized Direct or FFEL Stafford Loan. A subsidized loan is awarded on the basis of financial need. If you're eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you're in school, for the first six months after you leave school, and if you qualify to have your payments deferred. Depending on your financial need, you may borrow subsidized money for an amount up to the annual loan borrowing limit for your level of study.

You might be able to borrow loan funds beyond your subsidized loan amount even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you're eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay.

You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as you don't exceed the annual loan limits.
If you're a dependent undergraduate student, each year you can borrow up to

• $3,500 (as of the 2007-08 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year.
• $4,500 (as of the 2007-08 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year.
• $5,500 if you've completed two years of study and the remainder of your program is at least a full academic year.

If you're an independent undergraduate student or a dependent student whose parents have applied for but were unable to get PLUS Loans (a parent loan), each year you can borrow up to

• $7,500 (as of the 2007-08 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans.
• $8,500 (as of the 2007-08 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.
• $10,500 (as of the 2007-08 academic year) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

If you're a graduate or professional degree student, each year you can borrow up to:
$20,500 as of the 2007-08 academic year. No more than $8,500 of this amount may be in subsidized loans. When you graduate with a graduate or professional degree, the maximum total debt allowed from Stafford Loans is $138,500. No more than $65,500 of this amount may be in subsidized loans. This maximum total graduate debt limit includes Stafford Loans received for undergraduate study. However, the aggregate loan limit for graduate and professional students enrolled in certain approved health profession programs is $224,000.

These amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized FFELs or Direct Loans, individually or in combination. Because you can't borrow more than your cost of attendance minus the amount of any Federal Pell Grant you're eligible for and minus any other financial aid you'll get, you may receive less than the annual maximum amounts.

How will I get the loan money?
For both the Direct Loan and FFEL programs, you'll be paid through your school in at least two installments. No installment may exceed one-half of your loan amount. Your loan money must first be applied to pay for tuition and fees, room and board, and other school charges. If loan money remains, you'll receive the funds by check or in cash, unless you give the school written authorization to hold the funds until later in the enrollment period.

Generally, if you're a first-year undergraduate student and a first-time borrower, your school cannot disburse your first payment until 30 days after the first day of your enrollment period. This practice ensures you won't have a loan to repay if you don't begin classes or if you withdraw during the first 30 days of classes.

A school with a cohort default rate of less than 10 percent for each of the three most recent fiscal years for which data are available are not required to delay the delivery or disbursement of the first disbursement of a loan for 30 days for first-time, first year undergraduate borrowers.

What's the interest rate?
For all Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6.8 percent. This change from a variable to a fixed interest rate does not affect a borrower's variable interest rate on loans made before July 1, 2006.

For Stafford Loans first disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable (adjusted annually on July 1st) but will not exceed 8.25 percent. (You'll be notified any time the variable rate changes.) The interest rate for these loans in 2007-08 is 7.22 percent. (This rate applies to loans in repayment status; the rate may be lower during grace and deferment periods.)

Other than interest, is there a charge for this loan?
You'll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. For a FFEL Stafford Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the FFEL Program in your state) to help reduce the cost of the loans. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don't make your loan payments when scheduled, you may be charged collection costs and late fees.

When do I pay back my Stafford Loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month "grace period" before you begin repayment. During this period, you'll receive repayment information, and you'll be notified of your first payment due date. You're responsible for beginning repayment on time, even if you don't receive this information. Payments are usually due monthly.

During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).

How do I pay back my loans?
You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. You’ll repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. You will receive more detailed information on your repayment options during entrance and exit counseling sessions your school will provide.

What if I have trouble repaying the loan?
Under certain circumstances, you can receive a deferment or forbearance on your loan, as long as it’s not in default. During a deferment, no payments are required. You won’t be charged interest for a subsidized FFEL or Direct Stafford loan. If you have an unsubsidized Stafford Loan, you are responsible for the interest during deferment.
If you’re temporarily unable to meet your repayment schedule (for example due to poor health or other unforeseen personal problems), but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specified period.

Can my Stafford Loan ever be discharged (canceled)?
Yes, but only under a few circumstances. Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—the school closed, for example), or because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

Can I cancel the loan if I change my mind, even if I've signed the promissory note agreeing to the loan's terms?
Yes. Your school must notify you in writing whenever it credits your account with your Perkins Loan funds. The school must send you this notification no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of your loan if you inform your school you wish to do so within 14 days after the date your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive Perkins Loan funds directly by check, you may refuse the funds by returning the check.

When do I pay back this loan?
If you're attending school at least half time,* you have nine months after you graduate, leave school, or drop below half time* status before you must begin repayment (you might have longer than nine months if you're on active duty with the military). This period of time is called a grace period. If you're attending less than half time,* check with your financial aid administrator to determine your grace period. At the end of your grace period, you must begin repaying your loan. You may be allowed up to 10 years to repay.

PLUS Loans-Parent Loans for Undergraduate Students
Cover up to 100% of your children’s college expenses with a low-interest, fixed-rate Federal PLUS Loan. You can help your children pay not just for tuition and room and board, but for other school-related expenses, like books and fees. PLUS loans aren’t based on financial need or income, so you can’t be turned down for making too little or too much money.

Get the loan that financial experts recommend.

Financial experts agree:
Federally guaranteed PLUS loans are a smart financial strategy for parents of undergraduate students—they can help families meet college costs at below-market rates and generous terms. Federal PLUS Loans give eligible parents another option for college financing that serves as an alternative to dipping into the family savings or borrowing against a home.