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It’s  ideal to fund your college education without utilizing student loans, but a lot of times that’s not a reality. If this is the case for you, it’s important you are an educated consumer. Check out what you should know about student loans!

Types of student loans

Federal loans

Federal loans are sponsored by the Department of Education and require you have completed your Free Application for Federal Student Aid (FAFSA) to qualify. These types of loans will typically have the lowest interest rate and most flexible repayment options. Federal loans can come in the form of loans you take out in your name or PLUS loans which are taken out by your parents.

Private loans

If you’ve exhausted all of your other aid options, you may find yourself considering private loans through a bank, credit union, or loan company to cover the remaining cost of your education that your financial aid package does not account for. Be aware that these loans will typically carry a higher interest rate and do not offer as flexible of repayment options as federal loans. These companies are also in the business of making money, so always keep that in mind as well.

Things to make note of


Unfortunately, borrowing the money you need for today means you will be paying back that amount AND interest in the future. It’s important to be knowledgeable about how interest works for your loans so you can be sure you are choosing the best option available to you.

With federal loans, you will see the terms unsubsidized and subsidized. If your loan is a subsidized loan, this means the Department of Education is not going to charge you interest while you are still enrolled in classes (at least six credit hours.) Your loan starts being charged interest six months after you graduate or drop below six credit hours.

If your loan is unsubsidized, this means that you will be charged interest as soon as that loan is taken out. For private loans, you will most likely have interest from the beginning, but each loan will be different, so be sure to check out the specifics.

When it comes to interest, it’s also important to know what the interest rate is and whether the interest is variable or fixed. With variable interest rates you have to be careful because the interest rates can start out low and increase at any point. With fixed interest rates, it will remain the same throughout the lifetime of the loan.

Fine print

With all big purchases, it’s important to read the “fine print” and save copies for your reference. When it comes to student loans, look for things like origination fees, which are administrative fees associated with processing your loan. Your loan may also require you to do entrance loan counseling which will educate you on the terms of your loan, repayment, interest, etc. Be sure to pay close attention and save a copy of the information provided. You may also sign a master promissory note which is essentially your loan contract so you’ll want to read through it carefully before completing it and save a copy for your reference.

Your student loan balance

If you aren’t required to start paying back your loans until after you’re done with school, it can be easy to have an “out of sight, out of mind mentality.” As you take out loans, it’s a good habit to keep track of what you’ve borrowed and how to access that information in real time. You will most likely be offered more loan money than you absolutely need and it can be tempting to take it because it’s there, but DON’T do it! Only borrow what you absolutely need. Your future self will be so thankful for this. For federal student loans, you are restricted to $57,500 for your undergraduate career. Although, you don’t want to have to get close to this limit, some students do and you don’t want any surprises when you anticipate being able to fund your next semester via federal loans and you find out that you’ve reached your limit.

Repayment options

It may seem forever away, but eventually you will have to repay your loans. Before the time comes, you’ll want to research what repayment options are available to you and what your monthly payment will be. When it comes to repayment, also be in the know about any loan forgiveness programs that may exist for you, such as public service loan forgiveness or if your employers offers any sort of assistance towards repaying your loans.

Being a savvy consumer will serve you and (your wallet) well. The financial aid office at your college is always a great resource to educate you on student loans and answer any questions that you have. We have a section dedicated to tips on paying for college, you can check it out here.