Student Loans

After doing your homework, you might still need money to help pay for your education. If you've exhausted all options, including savings, work earnings and other financial aid, and you still have a balance due, student loans are available to help you.

As with all loans, you must repay what you borrow (the principal) plus interest (a percentage of the principal). When you make payments, each check is divided up to pay:

Any late charges or collection costs.
Interest accrued (or built up) since the last payment.
Possibly part of the principal.

Not all student loans are alike. The two categories of student loans are federal and private loans. Federal loans are your best option because they're controlled by the federal government. They differ from private loans in several ways:

	Federal Loans	Private Loans
Available From	U.S. government Private lenders on behalf of U.S. government	Private lenders like banks, credit unions, and savings and loans
Interest Rates	Fixed Generally lower than private loans Some loans do not accrue interest until repayment begins	Fixed or variable Generally higher than federal loans
Repayment	Deferred while enrolled at least half-time in college Interest may accrue on certain loans	May or may not be deferred while in school
Application Process	Must file a Free Application for Federal Student Aid (FAFSA) No cosigner required No credit check necessary with the exception of PLUS loans	Obtain an application from the lender May need to file a FAFSA May need a cosigner Likely subject to a credit check

In the end, if you must take out a loan, federal loans are generally your best deal.