What are Loans?

Student loans are financial aid, along with grants, scholarships, and work study.  They are almost always part of the financial aid package offered to a student.  A student loan must be repaid, just like a car loan or a home mortgage.  The student must accept the loan and complete a promissory note, and the loan remains in the student’s name until it is paid in full.

Most students do not receive enough grants and scholarships to cover the entire cost of education, and therefore rely on student loans to help fill the gap.  Student loans can come from several sources, and the terms (i.e. interest rates,  fees, repayment options, cancellation benefits, deferment benefits) can vary.   For example, the Federal Stafford Loan and the Perkins Loan are both federal loans, but the loan limits, interest rates, and grace periods differ.

Borrow Conservatively

Federal student loans offer low interest rates and varied repayment options, and they often provide a needed resource that allows a student to reach their educational goals. However, students need to be mindful that student debt can add up very quickly!  Do not borrow more than you absolutely need and only after you have exhausted all other resource options.