15 Crucial Things Every Student Should Know About Student Loans and Financial Aid

As higher education costs continue to rise, student loans and financial aid have become an integral part of the college experience for many students. Here are 15 important things every student should know about student loans and financial aid.

1. FAFSA: The Free Application for Federal Student Aid (FAFSA) is a crucial step in accessing federal grants, work-study programs, and student loans.

2. Grants: Unlike loans, grants do not need to be paid back. The most common grant is the Pell Grant, which is awarded based on financial need.

3. Scholarships: Similar to grants, scholarships do not require repayment but are usually merit-based rather than need-based.

4. Work-study programs: These federal programs offer part-time jobs to eligible students with financial need while they attend school.

5. Subsidized vs Unsubsidized Loans: Subsidized loans do not accrue interest while you are in school or during deferment periods whereas unsubsidized loans start accruing interest immediately after disbursement.

6. Parent PLUS Loans: Parents can take out these types of federal loans to help their children pay for college expenses but unlike other types of loan there’s no limit as far as the total amount borrowed goes

7. Private Loans: These non-federal loans may have higher interest rates and fewer borrower protections than federal options like Direct Loans.

8. Loan Forgiveness Programs: Certain careers such as nursing or teaching could qualify you for partial or full loan forgiveness if you meet eligibility requirements

9. In-School Deferment & Forbearance Options – If a borrower experiences hardship during repayment period then he/she may be able to put off payments temporarily using these options without penalty fees

10.Different Repayment Plans – There are different plans available depending on individual circumstances including income-driven repayment plans where monthly payments can vary based on your income level

11.Interest Rates – Interest rates will vary depending on the type of loan and may be fixed or variable

12. Grace Period – This is a period of time after graduation, leaving school or dropping below half-time status where repayment doesn’t begin immediately.

13. Late Payment Fees – If you miss a payment then there might be penalty fees added to your account plus it can also affect your credit score negatively.

14. Loan Consolidation – Borrowers with multiple federal loans are able to consolidate them into one Direct Consolidation Loan which could make payments easier as they have just one monthly payment.

15. Default Consequences – Defaulting on student loans can lead to wage garnishment, tax refund offsets, and other financial penalties that can significantly impact credit scores.

In conclusion, student loans and financial aid can provide important opportunities for students to finance their education and achieve their goals but it’s important to understand the different options available before taking out any loan so that you make an informed decision about what works best for you in terms of repayment plans, interest rates etc.