For Tech Support, please CALL 1-866-512-2273 OR TEXT your Student Number to 800-255-2020 OR

Loans

A loan is money you borrow and must pay back with interest.

Once you have applied for federal student aid using the Free Application for Federal Student Aid (FAFSA), your college or career school will determine if you qualify for federal grants, loans, or work-study.
You may be offered loans as part of your school’s financial aid offer.

If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan.

Student loans can come from the federal government or from private sources such as a bank or financial institution.
Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.

What is a Federal Student Loan?

Federal student loans allow students and their parents to borrow money to pay for a college or career school education.

A federal student loan is made through a loan program administered by the federal government.
Federal student loans also have flat interest rates set by Congress, while the interest rate on a private student loan depends on your or your co-signer’s credit.
Without a credit score of at least 690, you’ll likely pay a higher interest rate for a private loan than you would for a federal loan.

There are two types of Direct Stafford Loans, subsidized and unsubsidized.

Subsidized Loans
- The government will pay the interest on these loans while the student is enrolled in school and during grace and deferment periods.
Unsubsidized Loans
- Interest begins when the loan is disbursed. Students are responsible for paying the interest while in school. Payment of interest can be deferred by capitalizing the interest; however, this increases the amount of repayment.

A private student loan is a non-federal loan made by a private lender, such as a bank or credit union.

The terms and conditions of private student loans are set by the lender, not the federal government.
If you’re not sure whether you’re being offered a private loan or a federal loan, check with the financial aid office at your school.

Private student loans can be a good option if:

You have already completed FAFSA, to see if you're eligible for federal grants, work-study and federal loans.
You have already borrowed the maximum in both subsidized and unsubsidized federal student loans.
You have good credit or a co-signer who does. Most private student loan borrowers have a co-signer.
You borrow only what you need

Responsible Borrowing

Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest.

You may not have to begin repaying your student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.
Watch this video about responsible borrowing: Responsible Borrowing

How much should I borrow?

You can determine whether you need a loan and how much you need to borrow by adding up the total cost of your education (tuition, fees, room and board, etc.) and subtracting the amount of scholarships, grants, and savings you have to contribute to those costs.
You should borrow only what you need and consider the earnings potential in your chosen profession to determine how easily you'll be able to repay your debt. Y Your student loan payments should be only a small percentage of your salary after you graduate.

Federal Student Aid

Page updated

Google Sites

Report abuse