How do Student Loans Work?

Back to questions list

You should understand that there are two types of student loans: federal and private. The government, namely the Department of Education fund federal student loans. In order to get qualified for a federal student loan, you need to visit the official website of the Department of Education and fulfill the application form. The government will consider your request. Interest rates are always fixed.

Private lenders and banks offer private student loans that are less beneficial. All plans differ, some of them are designed for outstanding credit, some of them require a cosigner, etc.

If a student has troubles with debt repayment, he can apply for debt consolidation or refinancing.

How do graduate student loans work?

Graduate students also can apply for student loans. They should start from government student loans and fulfill the Free Application for Federal Student Aid with the U.S. Department of Education. The Perkins loans, the federal direct unsubsidized loans, the federal direct PLUS loans are a good option for graduate students.

Students usually choose payment plans that are suitable for their income and financial opportunities. They often collaborate with student loan services that direct them and tell the right decision. Speaking of the federal student loans, it’s very important to consider tax deductions – regular annual payments.