Navigating the world of college financing can be daunting, but understanding your student loans is a crucial step toward achieving your future goals. In today’s blog, we will delve into all aspects of student loans with helpful insights to empower your decisions as you embark on your college journey.
Federal Student Loans
Federal student loans offer benefits such as fixed interest rates, flexible repayment plans, and potential forgiveness options. To qualify for a federal loan, you must fill out the Free Application for Federal Student Aid (FAFSA). Here are the different types of federal loans:
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Direct Subsidized Loans
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These loans are offered based on financial needs and you will not need to pay interest on the loans while you’re in school.
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Direct Unsubsidized Loans
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These loans are available to both undergraduate and graduate students and are not based on financial needs, with interest accruing from the start.
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Direct PLUS Loan
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These loans are available for parents of dependent undergraduate students and graduate students. They require a credit check with interest accruing from the start.
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Direct Consolidation Loan
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These loans allow you to combine multiple federal loans into a single loan with a fixed interest rate.
Private Loans
In addition to federal student loans, private student loans are an option provided by banks and other lending institutions. If federal loans fall short, private loans can be used to supplement financial aid or to cover additional expenses. These loans are not based on financial need and may require a credit check or co-signer to qualify. Private loans will differ in their terms and interest rates based on the lender. Be sure to carefully consider the terms before committing to a private loan. For more information about our available loans, please contact us or visit our website.
Institutional Loans
Some colleges and universities offer their own loan programs, these are called institutional loans. The goal of these loans is to help students bridge the gap between available financial aid and the cost of attendance. Interest rates and terms can vary depending on the institution and can be a convenient option. It’s important to carefully evaluate the terms before choosing an institutional loan over other loan options.
Understanding Student Loan Repayment
After you have graduated, left school, or dropped below half-time, you will typically have a 6-month grace period for most federal loans before you need to start making payments. This gives you time to prepare financially and choose a repayment plan that works for you. Because grace periods and repayment terms and plans vary for each type of loan, it is crucial that you plan ahead and understand the terms of each of your loans.
As you embark on your educational journey, remember that knowledge is your greatest ally when it comes to student loans. Understanding the unique aspects of each type of student loan can empower you to make informed decisions that align with your financial goals. For financial assistance at American First Credit Union, contact our Financial Advisor, Greg Norman at greg.norman@cusonet.com or 562.237.5163.
