There are a few kinds of student loans out there, primarily in two categories, federal and private. Federal Loans are loans provided to you through the government whereas private loans are not. Private loans come from places such as local credit unions, banks, schools, or state agencies. A general rule of thumb is to seek federal loans first because of the general better interest rates, and then the remainder seek private loans, however, everyone’s financial situation is different.
If you are a high school student looking to apply for a loan, the easiest way you can go is through FAFSA. FAFSA itself is not a loan program, but rather an application to seek options for federal loans. FAFSA will tell you what you’re eligible for and the amounts as well. Federal Loans can be broken up into a few various kinds of loans:
Direct Subsidized Loans- This specific loan is a good option (but be eligible through demonstrated financial need) as the terms and interest rates are covered during certain periods such as enrollment in school half time, during the six-month grace period after you leave school, and periods of deferment.
Direct Unsubsidized Loans- These loans are similar; however, the borrower is responsible for interest that accrues, even when not in active repayment periods.
Direct Plus Loans (Parent and Graduate)- There are many differences between Plus Loans and Unsubsidized/Subsidized but even more so with parent and graduate. To read more about them, click here!
Direct Consolidation Loans- This loan combines eligible federal student loans into one. This could make it easier for payments but again depends on the financial situation at hand.
To read more about this breakdown of loans click here.
Private loans are given out through places such as local credit unions, banks, schools, agencies, etc. These loans have their application wouldn’t be under FAFSA. If you want to read more about private student loans, click here!
College is expensive, we all know this. Sadly, it’s not expected to drop in price anytime soon, so instead, we must all learn how to navigate it. In addition to student loan options, you must use a wide variety of resources to help you. This may be a college advisor, high school guidance counselor, or parent. Asking advice and taking the time to figure out which fits best for your financial situation is vital in such a big life decision.
In addition to people, you can talk to, there are plenty of online resources available as well. Budgeting your money and being smart about your spending is the first step to any large financial decision, college or not. You must begin doing this as soon as you can. If you need advice on how to navigate budgeting and saving so you can pay off those student loans… connect with me!
Another opportunity for you to use external resources to pay off loans once you are finished with college. For this, try ChangEd, a resource to help you put a spare change into paying off your college loans.
Stay organized, stay on top of your budgeting, and make sure to sit down with a trusted advisor (parent, guardian, counselor, financial coach) to make the best choice for yourself!
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