Everything You Need to Know About Student Loans

Thursday, August 04, 2022
Student Loans

If you are like most students, you are probably wondering how you will pay for your education. The cost of higher education continues to rise, and finding ways to cover the expenses can be challenging. 

One option that many students consider is student loans. Student loans can provide a way to immediately pay for school without worrying about money. 

In this blog, we will discuss everything you need to know about student loans. We will also cover the advantages of student loans and how to apply for them. So, whether you are just starting your college search or are already in school, read on for information about student loans!

What are student loans?

Student loans are types of financial aid that help students pay for their education. The government usually issues loans, but some private lenders offer student loans. Students typically have to repay their loans after they finish school, but some programs offer loan forgiveness.

There are two main types of student loans: federal student loans and private student loans. The government offers federal student loans with lower interest rates than private student loans. Banks and other financial institutions offer private student loans and typically have higher interest rates than federal student loans.

Most students need to take out some form of loan to help pay for their education, so it's essential to understand the different types of loans available. You should also be aware of the repayment terms and interest rates associated with each type of loan.

If you're considering taking out a student loan, make sure you understand all the terms and conditions associated with the loan. Be sure to shop around and compare interest rates before you decide on a lender. And always remember that you'll eventually have to repay your student loans, so be sure to budget accordingly.

Types of federal student loans

There are four main types of federal student loans: Direct Subsidized, Direct Unsubsidized, Perkins loans, and PLUS loans.

  • Direct Subsidized Loans are available to undergraduate students with financial need. The government pays the interest on these loans while the borrower is in school at least half-time, during the grace period, and during periods of deferment (postponement of loan payments).
  • Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. The borrower is responsible for paying the interest on these loans throughout the life of the loan.
  • Perkins Loans are low-interest federal student loans for undergraduates and graduate students with exceptional financial needs. The school is the lender, and you will make payments to your school.
  • PLUS Loans are federal student loans that parents and graduate or professional degree students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid. Parents and graduate or professional degree students borrow this money and are responsible for repaying it with interest.

Types of private student loans

  • Undergraduate: As the name suggests, these are loans for students who have not yet completed their undergraduate degrees. The terms and conditions of such loans vary from lender to lender and may require a co-signer.
  • Graduate: Graduate student loans are meant for those who are pursuing a master's degree or doctorate. These loans usually come with higher interest rates than undergraduate loans, but they may offer more flexible repayment options. 

Advantages of student loans 

There are many advantages to taking out student loans, even if it means going into debt. 

  • For one, student loans can help you pay for your education, which is an investment in your future. 
  • Additionally, many employers offer loan repayment assistance programs, so you could potentially have your loans paid off sooner than you thought. 
  • Finally, interest on federal student loans is tax-deductible— meaning you could save money come tax season. 
  • Student loans can be a helpful way to finance your education and set yourself up for success down the road.

Get connected with the right student loans and scholarships to make paying for college easier

Student loans are an essential part of financing a college education. It is crucial to understand the different types of loans available as well as the repayment options. And finally, don’t forget to apply for scholarships! The National Society of High School Scholars (NSHSS) can connect you with opportunities to make paying for college a little easier. Visit NSHSS today to get started.