Covering the Basics of Student Loans

Most students borrow money to attend college. If you or someone you know is planning to apply for Student Loans, here are a few basics to get started.

#1 - Understand Federal versus Private loans.
Students can apply for federal loans by completing a FAFSA at  You don’t need credit history to qualify, and they have income-driven repayment plans and forgiveness; private loans do not.

#2 - Borrow only what you need and can reasonably repay.
Aim to borrow an amount that will keep your payments around 10% of your anticipated take-home income. (i.e., if you expect to make $50,000/year, at current rates, your student loans shouldn’t cost you over $279/month.)

#3 - You will pay fees and interest on the loan.
You will owe more than you borrowed! It’s true; you still accrue interest and loan fees as you utilize your student loans. Federal loan fees are traditionally a percent of the total loan amount. Private loans use your and your cosigner’s credit history to determine your loan rate.

#4 - After you agree to the loan, your college handles the rest.
If utilizing Federal student loans, once you sign your promissory note (agreement to repay), the loan will be paid out to your college of choice. If there are funds left over after tuition and fees, you may receive that money. We suggest putting that refund back into your loan for less to pay in the end.

#5 - Ask questions!
Find out who your servicer is and when payments are due. We can’t express this enough. Understand where your loan is coming from and the details of your repayment schedule.