As the cost of a college education has continued to rise, 69 percent of college students 1 in 2019 took out student loans to make ends meet. Tuition, fees and room and board at private four-year colleges cost on average $49,640, while public universities clock in at $19,640, according to the College Board. While financial aid may cover some of the cost, most students need help paying the bills, and the typical borrower owes $29,900 by the time they leave college-loans they took out when they were barely old enough to vote. Even parents, who guide their high school seniors through the financial aid process, often don’t understand the basics of student loans and what’s available. Parents themselves hold an average of $37,200 in loans to help their kids get through school.

Federal Loans:

Students taking at least six credits can take out federal student loans, which are backed by the government. Rules about their terms and conditions are set by law. In addition to fixed interest rates, federal student loans also come with flexible repayment options and, in some cases, loan forgiveness.

Federal student loans can be either subsidized or unsubsidized. Interest on subsidized loans is paid by the government while you’re in school, for the first six months after graduation, and during any periods of deferment. Lees verder →