Whether you are starting to take out loans to pay for your education, or you are making plans to pay back your existing student loans, it’s important you understand student loan terminology to best help you gain control of your financial future.
What is a student loan?
A student loan is a loan specifically issued for you to help pay for your education or education-related expenses. This includes your tuition, living expenses, books, and class materials.
Who provides student loans?
Many students qualify for federal student loans. Federal student loans are issued through the government and are classified as Direct Subsidized or Direct Unsubsidized Loans. Students may also take out a loan to cover their education through a private lender.
- Direct Subsidized – If your family demonstrates financial need, this loan option may be available to you. This is the only type of federal student loan that does not accrue interest during your time in college if you are enrolled in school at least half-time.
- Direct Unsubsidized – This loan type is available to most graduate and undergraduate students, as they are not awarded based on financial need. Interest will accrue on direct unsubsidized loans at the time of disbursement.
- Private Loan – This loan type is issued by a private lender. The terms of a private loan vary from lender to lender. Because private loans often require a credit check of the borrower, students may need to have a parent cosign on behalf of them to qualify for private loans.
What loan type should I choose?
It’s important you do research before taking on any student loan debt. This includes planning out your expenses, understanding loan repayment plans, and talking to your college about your financial aid package.
Who can I talk to about student loans?
If you feel you don’t have control over your finances, want to make plans for financial future, or you need advice on how to handle paying off your student loans, speak to The Village Financial Resource Center. Their team of NFCC Certified Credit Counselors will help provide confidential financial guidance, money management education, budgeting advice and debt management help.