Funding Futures: Navigating Student Loans

Written by: Valeria Koktysh

Student loans are a common cause of debt and financial instability for people across the US . There are laws in place that protect students from being trapped in debt from loans.  

   First off, there are two types of student loans: federal and private. Federal loans are given by the government to students with laws on when students/parents can pay them, and the interest rate is remarkably low, being only 5%. These loans also offer more freedom when repaying them, as the payment plans usually start AFTER the student graduates (or can be pushed back to after graduation). There’s clear benefits and downsides to both private and federal loans

Students can apply for Federal loans through FAFSA form, and receive financial aid for higher education. Your social security number,  tax information, W-2 documents, family or student income, and assets like stocks, property, and/or businesses. All of this information is used by the State to find your eligibility for aid. 

There are multiple types of federal loans, PLUS loans, unsubsidized, and subsidized. 

Plus loans are taken by the parent of a student(biological or adoptive) with good credit history, qualified for student aid. 

Unsubsidized loans can be taken by students whose schools participate in the Direct Loan program. Finally, Subsidized loans are for undergraduate students who need financial aid. As stated before, the FAFSA form is how you apply to any of these loans. 

Private plans, on the other hand, are offered by financial institutions like credit unions, banks, or lenders. There are four types of private loans. Undergraduate, Graduate, parent, and income-share agreements. 

Students and parents can apply to loans directly on the lenders website, and fill out the necessary information there as well.  

Private loans are beneficial in the fact that they can benefit students that are not eligible for full federal aid, and still have lots of money to repay. However, private loans have more restrictions and information used when applying/paying. Private loans have higher limits on aid, and also allow graduate students loans catering specifically to their major/career, or program. 

https://studentaid.gov

(ibid.)

whitehouse.gov

usnews.com

finaid.uccs.edu

law.cornell.edu

cnn.com