Important things to Know About Your Student Loans


Have you decided to go to college but don’t have the financial means to make your dream come true? Fortunately, for many Americans, there are many options available to cover college tuition costs, such as:

  1. Grants and scholarships;
  2. Study abroad;
  3. Student loans.

If you have not been able to get a scholarship and have no desire to study abroad, then student loans may be the best choice. But this is a severe step, as this decision will affect your life in the coming years. Therefore, in this article, we will explain what you should know about your student loans.

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 1. Choose Federal Loans First

There are two types of loans for US citizens:

  1. Federal loans issued by the United States Department of Education;
  2. Private loans issued by banks or other organizations.

The difference is primarily in the interest rate, which is lower in federal loans. Moreover, federal loans have better conditions for forbearance, repayment plan, and delay, making the whole process easier for students. Choose private loans only when federal loans cannot fully cover your tuition costs.

2. You have to pay interest rates

Have you ever wondered what the profit is for the state or banks to lend you money? Interest rates are the main reason why private or public organizations are willing to lend you money. In simple terms, it is the percentage of your total original loan that you will have to pay back. The longer you pay off the loan, the higher your interest rate in the end. For this reason, it is not recommended to be late or miss the month of repaying your student loan, as by doing this regularly, you will only refund the interest rate and not the loan itself. As a result, you will lose a considerable amount of money.

Federal loans often set interest rates up to 3-4%, while banks can charge their borrowers up to 13-15% interest rates, but naturally, you can find more adventurous proposals.

3. Pay attention to your repayment plan

There are two types of repayment plans:

  1. A debt repayment plan adapted to your monthly income. This option will help you ease your credit burden and improve your quality of life during the debt repayment period. However, it would be best to consider that you would pay little, but for a long time, with this plan. As a result, you will have to pay a lot of money due to the interest rate.
  2. An intensive debt repayment plan does not depend on your income. This plan is ideal for those who want to pay off their debt in full quickly. This option will significantly complicate the borrower’s life and increase his loan burden. However, you can quickly repay the debt by choosing this option, and the loan rate will not be too high. If you cannot handle this plan, you can ask the bank or government agency to go to the first option.

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 4. Pay attention to other specifications of your student loan

 There are so many other options that you should consider:

  1. In what cases you have the right to be late with a loan repayment. Many banks and government agencies make concessions in some cases, including illness, unemployment, bankruptcy, low income, etc;.
  2. When you will need to start repaying the loan: immediately after signing the contract or after completing college;
  3. In what cases you can ask to forgive your loan. Banks and government agencies can forgive you debt if:
  • You have been working in the public sector for over ten years;
  • You have been working as a teacher for more than five years and have a low income;
  • You serve in the army and have an officer rank, or are a war veteran;
  • You are physically unable to pay off the debt;
  • You are bankrupt;
  • Your diploma or college certificate is no longer valid.

There are other reasons why you can ask to forgive your loan, but these are the most common causes.

5. Borrow only the amount you need

If you are taking out a loan, then try to borrow only the amount you need. Try to take out a loan only for study, and cover your expenses for accommodation, transport, and food by other means, such as part-time work.


We have introduced you to the five most essential points you should consider before choosing a student loan. Next, be sure to read the contract and familiarize yourself with each condition of your loan to avoid future problems. Finally, if this process seems too complicated for you, we recommend contacting a loan officer.