Student loans are financial aid tools that allow students to borrow money for education-related expenses, including tuition, fees, books, and living costs. Loans must be repaid with interest over time.

Federal Student Loans: Offered by the U.S. government, these loans often have lower interest rates, flexible repayment options, and borrower protections like income-driven repayment (IDR) plans and forgiveness programs.

Private Student Loans: Issued by banks, credit unions, or other private lenders, these loans typically depend on the borrower’s creditworthiness and may lack the benefits and protections of federal loans.

To apply for federal student loans, you must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA determines your eligibility for federal loans, grants, and work-study programs.

The amount you can borrow depends on the type of loan:

• Federal Loans: Borrowing limits vary by loan type and academic level. For example, dependent undergraduates can borrow up to $5,500–$7,500 annually in Direct Subsidized and Unsubsidized Loans.
• Private Loans: Limits are set by the lender and may depend on creditworthiness and the cost of attendance at your school.

Repayment typically begins after graduation, leaving school, or dropping below half-time enrollment. Federal loans often include a six-month grace period, while private loans may have different terms depending on the lender.

Interest is the cost of borrowing money, calculated as a percentage of the loan balance. Interest accrues over time and is added to your total repayment amount, making it important to understand your loan’s interest rate and how it impacts costs.

Yes, you can pay off your loans early without penalties in most cases. Paying extra toward the principal reduces the total interest you pay over the life of the loan and helps you become debt-free faster.

If you’re struggling to make payments, contact your loan servicer immediately to explore options such as deferment, forbearance, or income-driven repayment plans. Avoiding payment without communicating with your servicer can lead to delinquency or default.

IDR plans adjust your monthly federal loan payments based on your income and family size. These plans often lower monthly payments and may include forgiveness of remaining balances after 20–25 years of qualifying payments.

Discharging student loans in bankruptcy is challenging but not impossible. Borrowers must demonstrate undue hardship, and recent legal changes may make this option more accessible for some borrowers.

Many employers offer student loan repayment assistance as part of their benefits package. Check with your employer to see if they provide this benefit and how it works.

Refinancing involves replacing your existing loans with a new private loan, often to secure a lower interest rate or different repayment terms. While refinancing can save money, it may not be suitable for borrowers with federal loans due to the loss of federal benefits.

Loan forgiveness cancels all or part of a borrower’s loan balance, often in exchange for meeting specific requirements, such as working in public service or a qualifying profession. Examples include Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness.

For federal loans, visit the Federal Student Aid website (studentaid.gov) to log in and view your loan servicer information. For private loans, check your loan agreement or contact your lender directly.

If your loan goes into default, contact your servicer immediately to explore options like loan rehabilitation or consolidation to bring your loan back into good standing. Avoiding default consequences, such as wage garnishment, is critical.