Unlike the other financial aid options, you must repay loans. Contrary to popular belief, there are many types of loans and ways to repay them, and with some careful consideration and planning, loans will not be too difficult to pay off (though they may take some time, depending on the type of loan and the amount you borrow). There are also options to defer or delay payment if necessary and a loan “grace” period, during which you do not have to start paying back your loan until 6 months after you graduate or drop below half-time enrollment.

There are 2 types of loans: federal loans and private loans. Federal student loans come from the federal government and have lower interest rates and have more flexible repayment options. Private student loans come from banks, credit unions, and other financial institutions and usually have higher interest rates and less repayment options. For a comparison of federal and private loans:

Most students need some kind of loan to help pay for college. Aim to have scholarships, grants, and work-study (and family contributions, if possible) be the source of the majority of your financial aid and take out as little loans as possible. If you must take out a loan, try to have the majority of it be a federal student loan. Again, you must have completed FAFSA to receive a federal student loan:

There are 2 major federal student loans: Direct (Stafford) Loans and Perkins Loan.

The Federal Perkins Loan is a low-interest (fixed at 5%) federal student loan for students with exceptional financial need, and the school is the lender. 2 perks with the Perkins loan: the interest is always fixed at 5%, regardless of the interest on student loans set by Congress, and the grace period is 9 months after graduation instead of the usual 6 months. For more information about the Perkins Loan, check:

Most students will have a Direct (Stafford) federal loan. There are 2 main types of Direct loans: Direct Subsidized Loan and Direct Unsubsidized Loan.

Direct Subsidized Loan: The U.S. Department of Education pays the interest while you’re in school (and enrolled at least half-time) and during the “grace” period, which means you’ll be paying less overall. You must have financial need to qualify for the subsidized loan.

Direct Unsubsidized Loan: You’ll be paying the interest that accumulates

while in school and during the grace period (you can also pay only the interest while in school), which means you’ll be paying more (original amount + interest that piles up). You don’t have to have financial need to qualify for this loan, so they have less mercy on you.

More information about Direct (Stafford) loans:

Information about interest rates & how to calculate interest:

If you still need more money to pay for college, your parents can also take out a loan called the Direct PLUS Loan to help pay for your education:

If your parents decide to get a Plus loan for you, be extra good to them!



Repayment: What to Expect –

How to Manage Your Student Loans:

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