How Student Loans Work From Start to Finish

Student loans are a way to pay for higher education. Whether you love debt or you hate it, student loans are an investment in your future. They can make an education possible when there is no other way. This page covers the basics of student loans and points you towards additional resources.

Student loans are unique because they have some special features. You often get an attractive interest rate, and almost any student can borrow some money – regardless of income or credit history. Student loans offered through government programs tend to be the most attractive.

• Advantages of Federal Student Loans
• Private Student Loan Basics - Compare to Government Loan Programs

To get a student loan, your first step is to fill out the Free Application for Federal Student Aid (FAFSA). You should submit your FAFSA as soon as possible – you can make estimates and correct the details later. Once you’ve completed your FAFSA, you’ll want to visit your school’s student aid office. Ask what kind of aid you might expect.

• What is the FAFSA?

So that you’re prepared, familiarize yourself with some of the most common student loans:

• Perkins Loans should be a first choice because of their low interest rate
• Stafford Loans are easy to qualify for, and the interest charges may be subsidized for some time
• PLUS Loans allow parents to borrow very large dollar amounts so that you can cover all your costs

You can postpone repayment of your loans under a variety of conditions. This is called a deferment. While you’re in school, for example, you may qualify for an in-school deferment. When you’re in a tough financial spot you can often temporarily stop paying back your loans without any penalty or damage to your credit.

• How Deferments Work

After you’ve finished your education, expect to pay those loans back. Most often your lender will set up an amortizing repayment schedule. If you’ve taken several loans over the years, you may want to consider consolidating your loans. Student loan consolidation has some unique benefits that you can’t find in any other type of loan.