Student Loans
Student loans are just what they sound like: money you can borrow to help pay for an education. These loans are typically used for two- or four-year public or private colleges and universities, trade schools or career schools. There are two main types of student loans: federal student loans and private student loans.
Federal Student Loans
Federal loans come from banks that are guaranteed by the U.S. government to allow students and parents to borrow and repay with interest. These are the loans you want to try to get first, since they typically have the best loan terms. Regardless of which federal loan you choose, you must complete a Free Application for Student Aid (FAFSA) to apply for a federal loan.
Private Loans (also called "Alternative Loans")
Some people turn to private loans when federal loans aren't enough to cover the complete cost of an education. Private loans are usually based on income and credit history rather than economic need. Private lenders, banks and other financial institutions can provide more money per loan than federal loans.
Do I need a loan?
Your student loan eligibility depends on how deep your pockets are and what school you want to attend. Remember that costs aren't just about tuition, room and board. Expenses like books, laundry and supplies can add up quickly. According to the College Board's Trends in Student Aid 2007-08 report, the soaring price of a college education has outpaced financial aid and federal loans. Private loans have skyrocketed, currently equaling about 24 percent of total education loan volume.
Can I afford a loan?
Student loans are designed to fit many types of situations. In general, how much you borrow depends on how much you think you can repay when the loan is due. Since you'll be paying back a loan with interest, you will always pay back more than you receive. Some loan plans don't start repayment until after you graduate; others put you on a repayment plan immediately. Most loans also have additional fees, such as origination and processing fees. Only borrow what you need, and always examine the terms of your loan carefully to fully understand what you'll be paying back over the full term of your loan.
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Now that you've read the Student Loan | Learn About Student Loans page, check out Financial Aid Qualification | Learn About Financial Aid for School.