Affordinghigher educationhas become increasingly difficult for students and families.
As of 2024, college students pay an average of$108,584for four years of in-state tuition.
However, it pays off for many in the long run.
Those with a bachelors degree typically earn75% morethan workers with only a high school diploma.
But how do student loans work, exactly?
And which punch in of student loan is right for you?
Our comprehensive guide tells you everything you should probably know about applying for and repaying student loans in 2024.
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What Are Student Loans?
Like any pop in of loan, you must repay it in full over time, plus interest.
However, student loan repayments are typically delayed until the student finishes college.
you’re able to use student loans to pay for undergraduate or graduate education.
In fact,65% of all federal student debtcomes from students in graduate programs.
Student loans differ from grants and scholarships in several ways.
Grants and scholarships are often highly competitive and difficult to obtain, reserved for only the most in-need students.
Loans are a much more common throw in of funding, with fewer requirements and greater accessibility to students.
How Do Student Loans Work?
Some private lenders require proof of enrollment before approving a loan.
Most loans have borrowing limits that depend on the year in school or the level of financial need.
Private loans may have higher limits, but those funds come with higher interest rates.
Leftover funds go to the student to pay for other school-related expenses.
Interest
Interest rates and terms differ depending on the bang out of student loan.
For example,federal loansusually come with fixed interest rates set by the government.
With Direct Subsidized Loans, the government pays interest until a student graduates.
For Direct Unsubsidized Loans, interest accrues immediately, even while the student is in school.
Private student loans can come with fixed or variable interest rates.
The terms of private loans vary, with many requiring payment while students are still in school.
Theres a reason for the stark imbalance.
Federal student loans offer more favorable benefits and protections to borrowers.
Heres what you should know about each option.
These loans typically come with better rates and more flexible repayment options than private student loans.
Financial institutions like banks and credit unions issue private loans.
Unlike federal loans, they do require a credit check.
Terms, interest rates and limits all vary depending on the lender and the borrowers credit history.
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Remember, grants and scholarships dont have to be paid back, while student loans do.
Consider private loans once all other options are off the table.
Heres how to apply for student loans:
1.
Here are thebasic requirements:
2.
Complete the FAFSA Form
After confirming eligibility, students must complete theFAFSA formby the specific state deadline.
This form is required for all federal and state financial aid programs, including grants and scholarships.
Students can accept or decline offers based on college costs.
Managing Student Loan Debt
Its never too early to think about managing your student loan debt.
In fact, the sooner you consider your repayment plan, the better.
Be sure to compare repayment plans using aloan simulator, which estimates monthly payments and time frames for repayment.
Visit thePSLF websiteto learn more about the system process.
Another drawback is only American students can apply for federal student loans international students dont qualify.
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Alternative to Student Loans
Student loans arent the only way to pay for higher education.
Grants and scholarships are an even better choice because they dont have to be repaid.
Thankfully, student loans help bridge the gap and make higher education more accessible for all income levels.