Paying for college is never a simple proposition – the rising costs of tuition and other related educational expenses are enough to make many parents find alternative ways to fund their child’s education. The amount of debt incurred during four years of school can reach well into six figures, so finding the right loans with the best interest rates is often a top priority for parents and students alike.

Public Student Loans
Public student loans (those guaranteed by the federal government through the Higher Education Act of 1965) include Stafford, Perkins and PLUS loans:

Stafford Loans – Feature a fixed interest rate of 5.6% for subsidized (the government pays the interest while you’re in school) loans and 6.8% for unsubsidized (you pay all the interest) loans. These are need-based loans that require you to complete a Free Application for Federal Student Aid (FAFSA). Students whose families make less than $100,000 a year receive 90% of all Stafford loans, and most Stafford loans are awarded to those with families with an adjusted gross income of under $50,000 a year.

Loan limits are up to $7,500 for most undergrads, although you can receive much more if you have special circumstances (i.e. your parents are denied a PLUS loan) or you are enrolled in medical school. Repayment begins six months after graduation, but Stafford loans can be deferred up to 36 months (non-consecutively) after the grace period because of financial hardship.

Perkins Loans – Feature a fixed interest rate of 5% and are for students with extreme financial need. They are awarded based on FAFSA calculations, so you must complete this form in order to qualify. They are subsidized by the government and have no origination fees or default fees. Perkins loans are capped at $5,500 a year with a lifetime maximum set at $27,500 for undergraduate students enrolled in 2009-2010. Graduate students are limited to $8,000 a year with a lifetime maximum of $60,000 (including undergrad loans).

PLUS Loans – Feature a fixed interest rate of 8.5% (or 7.9% with direct government funding sources) and can only be taken out by parents of a child enrolled in an accredited higher education institution. Deducted from the loan amount are a 3% origination fee and a 1% federal default fee. These loans can be used to pay for a child’s entire tuition, minus financial aid. Repayment begins 60 days after full distribution of funds and lasts for up to 10 years.

Private Student Loans
Private student loans can be taken out through any major bank or financial institution, so the interest rates and specific terms of repayment can vary greatly. When applying for a private student loan, your credit history is paramount, since eligibility is solely based on credit. If a student has bad credit, a co-signer is required. Interest rates for private loans hover around 6%, but can go as high as double-digit rates.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.