For many young adults, the joy of receiving college acceptance letters may soon fade once they realize that the financial aid packages offered by schools may not cover the entire cost of a college education. This undoubtedly creates stress for first-year students (and their parents) but understanding the various student loan options available can help ease those worries so they can focus on their studies, not their bills.
There are many different types of ways you can pay for college, including scholarships, grants, funding from family, student loans or a combination of these. For those who need help with their education costs, student loans are a viable and valuable option.
There are basically two types of student loans – federal student loans and private student loans. Each type of loan has a variety of programs and payment options. For example, there are four types of federal loans for students: direct subsidized loans, direct unsubsidized loans, Direct PLUS loans and direct consolidation loans. For private student loans, there are dozens, if not hundreds, of private lenders to choose from.
Do I Qualify?
Generally, if you’re attending an undergraduate or post-graduate program (medical, dental, law school, etc.) at an accredited college you may qualify for a student loan. Parents of students may also apply for student loans
to help fund their child’s education.
For federal student aid, students must complete the Free Application for Federal Student Aid for each upcoming school year. Commonly referred to as FAFSA, this comprehensive application is used by most states to distribute financial aid programs, including Cal Grant awards in California. Also, many colleges use it to determine the amount of assistance they will offer.
For private loans for students, Travis Credit Union has partnered with Sallie Mae to help get you (or your child) the money needed. We also provide you with college student loan resources so you can prepare for college costs early on.
Student Loans versus Personal Loans
When considering lending options for college, student loans are better than personal loans. One of the advantages of student loans is that they will have a lower interest rate and usually have easier qualification requirements. Personal loans are based entirely on your credit and ability to repay the loan. For first-year students, meeting the credit requirement for personal loans may be challenging if they have not established any credit history and have no job history.
For those with student loans, repayment begins after you have graduated from college. Some programs allow you to defer the start of the payment for six months so you can get settled into that first full-time job.
Both federal and private lenders will offer multiple repayments options that may defer or extend payments, based on your needs. Many lenders offer a fixed rate monthly payment plan that remains the same over your loan term.
Given the wealth of information available on student loans, it’s a good idea to start early and learn as much as possible so you may make the right choice for your needs. Begin with Travis Credit Union’s Student Loan page to view different types of loans available. Our Financial Wellness Hub can also teach you more about student loans. You can find more information about the credit union at traviscu.org.