What is a Student Loan?

Expenses for tuition, room, and board at a secondary education institution can be loaned to a student and paid off over time in the form of a student loan.

Tuition and other college expenses have inflated at a much faster rate than the rest of the consumer price index. These institutions can charge more and more as they experience student housing crunches and an ever-growing demand for college education.

Needless to say, scholarships have become harder and harder to come by, and more and more students find themselves with massive financial obligations when their coursework is through. Student loans can be arranged through the federal government or a private institution.

Sallie Mae used to be a federal program, but is now a private loan originator. A new entity, Navient, has taken over as the loan servicing company for federal student loans.

Students can find out what loans they can qualify for by filling out the Free Application for Federal Student Aid (FAFSA) (PDF Download 17-18 — Found Here). In general, private loans will be more expensive than federal loans, and will not contain as much flexibility.

They also tend to have adjustable loan rates that become more expensive over time, while federal loans tend to have fixed payments for the duration of the term.

Private loans might expect you to start paying them off while you’re still enrolled in school, while federal loans will allow you to wait until you graduate, or until your student status switches to part-time.

What is the Federal Supplemental Education Opportunity Grant?
What is a Balloon Loan?