How Much Are Student Loans For College

Last Updated on May 23, 2022

Student loans are a huge burden for many students and graduates. Some choose to pay them off, but others are left with a mountain of debt that they can’t seem to climb. If you’re wondering how you can get out of student loan debt, there are several solutions.

One option is refinancing your student loans. This means that your lender will find another lender willing to give you a lower interest rate and better terms, allowing you to pay less over time. However, this isn’t always possible if your credit score isn’t high enough or if your debt is too large.

Another option is consolidation, which allows you to combine all of your student loans into one monthly payment. However, this may not always be possible either because it requires good credit or because it could actually make things worse by increasing the amount due each month!

If neither refinancing nor consolidation work for you, then perhaps consolidating an eligible private loan with an eligible federal loan will do the trick. It’s important to note that this process may take some time before it’s complete so make sure you plan ahead!

How Much Are Student Loans For College

Step 1: Fill Out the FAFSA
The first step in applying for student loans is to fill out the government’s Free Application for Federal Student Aid (FAFSA). The FAFSA asks a series of questions about the student’s and parents’ income and investments, as well as other relevant matters such as whether the family will have more than one child in college at the same time. Based on the information you supply, the FAFSA will calculate your Expected Family Contribution (EFC). That’s the amount of money the government believes you should be able to pay for college for the coming school year out of your own financial resources.

You can complete the FAFSA online at the office of the Federal Student Aid website.1 To save time, round up all of your account information before you sit down to start work on it. You must not only complete the FAFSA when you first apply for aid but every year after that if you hope to continue receiving aid.

Step 2: Compare Your Financial Aid Offers
The financial aid offices at the colleges you apply to will use the information from your FAFSA to determine how much aid to make available to you. They compute your need by subtracting your EFC from their cost of attendance (COA). Cost of attendance includes tuition, mandatory fees, room and board, and some other expenses. It can be found on most colleges’ websites.

In order to bridge the gap between your EFC and their COA, colleges will put together an aid package that may include federal Pell Grants and paid work-study, in addition to loans. Grants, unlike loans, do not need to be paid back, except in rare instances. They are intended for students with what the government considers “exceptional financial need.”

Award letters can differ from college to college, so it’s important to compare them side by side. In terms of loans, you’ll want to look at how much money each school offers and whether the loans are subsidized or unsubsidized.

Direct subsidized loans, like grants, are meant for students with exceptional financial need. The advantage of subsidized student loans is that the U.S. Department of Education will cover the interest while you’re still at least a half-time student and for the first six months after you graduate.

Direct unsubsidized loans are available to families regardless of need, and the interest will start accruing immediately.2

Payments and interest on these loans was suspended in 2020 during the economic crisis, with both resuming in mid-2022.3

If you qualify, a college might offer you both subsidized and unsubsidized loans.

Federal loans have a number of advantages over student loans from banks and other private lenders. They have relatively low, fixed interest rates (private loans often have variable rates) and offer a variety of flexible repayment plans.

However, the amount you can borrow is limited. For example, most first-year undergraduates can only borrow up to $5,500, of which no more than $3,500 can be in subsidized loans. There are also limits on how much you can borrow in total over the course of your college career.5

If you need to borrow more than that, one option is a federal Direct PLUS Loan. PLUS loans are intended for the parents of undergraduates (as well as for professional and graduate students). PLUS loans have higher limits—up to the full cost of attendance minus any other aid the student is receiving—and are available regardless of need. However, the parent borrower must generally pass a credit check to prove their creditworthiness.

Step 3: Consider Private Student Loans
Another option if you need to borrow more money than federal student loans can provide is to apply for a private loan from a bank, credit union, or other financial institution.

Private loans are available regardless of need, and you apply for them using the financial institution’s own forms rather than the FAFSA. To obtain a private loan, you will need to have a good credit rating or get someone who does have one, such as a parent or other relative, to cosign on the loan.

Having less-than-stellar credit can make it difficult to qualify for student loans. Private lenders will consider your income and credit history, and as a college student, you likely have poor credit or no credit at all. However, some lenders offer student loan options for borrowers with bad credit.

Generally, private loans carry higher interest rates than federal loans, and these rates are variable rather than fixed, which adds some uncertainty to the question of how much you’ll eventually owe. Private loans also lack the flexible repayment plans available with federal loans and are not eligible for loan consolidation under the Federal Direct Consolidation Loan program. However, you can refinance your private loans after you graduate, possibly at a lower interest rate.

Each college will notify you of how much aid it is offering around the same time that you receive your official acceptance. This is often referred to as an award letter. In addition to federal aid, colleges may make money available out of their own funds, such as merit or athletic scholarships.

Step 4: Choose Your School
How much you’ll have to borrow to attend one college versus another may not be the most important factor in choosing a college. But it should definitely be high on the list. Graduating from college with an unmanageable amount of debt—or, worse still, taking on debt and not graduating—is not only a burden that might keep you up at night; it can limit—or even derail—your career and life choices for years to come. Also factor in the future careers you are considering when you choose to pay more for college. A career with a high entry-level salary will put you in a better position to repay your loans and justify taking on more debt.

what are the 4 types of student loans

Federal student loans make up the vast majority of student loans in the U.S. They are made by the federal government with the U.S. Department of Education acting as the lender, and they typically have better benefits and terms than private student loans. However, these benefits and terms can vary greatly by loan type, so it’s important to become familiar with those that you may be eligible to borrow before you sign on the dotted line.

Keep in mind that all student loans, including federal loans, are money that you are borrowing to pay for school and must pay back with interest. Before borrowing student loans to cover the cost of college or postsecondary training, consider your options carefully and do your best to reduce the amount that you have to borrow. Always explore and apply for scholarships and accept any grant aid or work-study options that you are offered before looking at loans.

To apply for federal student loans and other types of federal student aid, you must complete the Free Application for Federal Student Aid, or FAFSA, each year. You can do this online at or in the myStudentAid mobile app.

There are four types of federal student loans available:

Direct subsidized loans
Direct unsubsidized loans
Direct PLUS loans
Direct consolidation loans
Direct Subsidized Loans
Direct subsidized loans are available to eligible undergraduate students with demonstrated financial need. Your financial need is determined using a formula with the information provided on the FAFSA.

If you qualify, this loan has slightly better terms that other federal loans because the federal government will cover the interest during certain periods, including while you are enrolled in school at least half time, during the six-month grace period after you leave school and during periods of deferment.

The current interest rate on direct subsidized loans is 2.75%, which is fixed over the life of the loan. There is an origination fee, which is 1.057% for loans made after Oct. 1, 2020, and before Oct. 1, 2021.

A credit check is not required, but there are limits on the amount in unsubsidized loans that you are eligible to receive each academic year and in total. The limits depend on your year in school and whether you are a dependent or independent student, which is based on information you supplied on the FAFSA.

These loans are eligible for all the key benefits of the federal loan program that are designed to protect you as a borrower. You do not have to repay them while you are enrolled in school at least half time and during a six-month grace period after leaving school. Direct subsidized loans are eligible for several repayment plans that are designed to help you through periods of financial distress, as well as loan forgiveness programs like Public Service Loan Forgiveness, or PSLF, under certain conditions.

Direct Unsubsidized Loans

Direct unsubsidized loans are similar to subsidized loans with some key differences. Most significantly, the unsubsidized loan borrower is responsible for the interest that accrues during all periods, even when the loan is not in active repayment. Also, unsubsidized loans are available to both undergraduate and graduate students, and eligibility is not based on financial need.

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