Student Loans FAQ

How do I choose the right student loan for me?

student going over student aid optionsYou have many options when it comes to student loans for higher education. A few things to keep in mind:

Fill out the Free Application for Federal Student Aid (or FAFSA). Without it, you won’t have access to federal student loans – many of which are not based on need or your income.

Always use federal loans first, such as the Perkins, Direct, and PLUS loans. They carry lower, fixed interest rates and often have more favorable terms than private (or alternative) loans.

If you need to use private student loans, consider all of the costs. Private loans can have origination fees, different ways of compounding interest, and higher interest rates or APRs.

Know your credit score. The lower your score, the higher your rate will likely be on a private loan. Most student borrowers will need a credit-worthy co-signer to be approved for a private student loan. Most private loans have variable interest rates (meaning they will fluctuate over time), while government-backed (or federal) loans have fixed interest rates and more lenient repayment terms.

Investigate your loan options carefully by considering the following:

  • Total cost of the loan (after all of the interest and fees are taken into account)
  • APR or annual percentage rate
  • Borrower rewards (such as cash back or interest rate reductions for making on-time payments)
  • Monthly payment
  • Deferment options
  • How was this set of student loan results selected?
  • SimpleTuition’s loan search and comparison tool save you time by doing the research for you. We connect you to the lender to apply for the right student loan for your borrowing needs.

SimpleTuition pre-screens loans based on your search criteria. We have up-to-date pricing and eligibility information from lenders, which allows us to present the most relevant loan options to you in an apples-to-apples comparison.

We filter loans based on the loan amount, student’s school, degree program, and state of residence, and monitor any changes due to events in the lender and credit industry.

As the economy changes, lenders have tightened their lending criteria or even stopped lending altogether. Some lenders will not allow borrowing by students at certain schools because of the risk the student will default on the loan. Lenders often restrict the amount that they will loan, and some lenders are not licensed to lend in certain states.

What are my repayment options?

repaymentMost student loans have a few options for when you can start repayment. If you are enrolled more than half-time, you usually do not have to make payments on the loan while you are in school. If the loan is in just a parent’s (or guardian’s) name, you often do have to repay the loan taken out for your child, unless you are also in school yourself. After you leave your program or graduate, your loan may include a grace period of anywhere from 3 months to a year during which you do not have to make repayments. Depending on the type of loan, interest may or may not accrue during both the in-school and grace periods.

When you first take out a loan, your lender may let you choose from three types of repayment options:

Refinance your student loan

What information do I need to apply for a loan?

In order to complete an application for a private student loan with most lenders, you will need the following information:

  • Your full name, social security number and date of birth
  • Your permanent address and the number of years you have lived there (no P.O. boxes)
  • The amount of your monthly rent or house payment
  • Your home phone number
  • Your current occupation and position
  • The name of your employer and how long you have been employed by them
  • The business phone number of your employer
  • Your gross annual income
  • The contact information for a reference (name, address, home/business phone number)
  • The name of your school (or the school the student for whom the loan is for is attending)
  • The social security number, contact and employment information for your co-signer (if applicable)
  • Applying for federal student loans may require somewhat less information, but does require completion of the FAFSA.

When do I need to fill out the FAFSA? Is there a deadline?

girl filling out the FAFSAYou should fill out the FAFSA as soon as you can after January 1st of each year. Because the FAFSA asks for tax information from the previous calendar year, you may want to wait until your family has all of the necessary paperwork or has filed their income taxes. You can file the FAFSA before filing your income taxes using estimates, but you will need to go back later and correct any discrepancies.

The only deadline for filling out the FAFSA is June 30th at the end of the school year for which you are filing. In other words, for the 2015-2016 school year, the FAFSA will be available on January 1, 2015. You can file the FAFSA anytime between then and June 30, 2016. However, many states and schools allocate funds on a first-come, first-served basis, and some states have deadlines for filing the FAFSA to be eligible for certain kinds of aid. Please visit the Department of Education’s Student Aid on the Web for more information.

What happens if I cannot repay my loans?

Lenders will not forgive loans simply because the borrower could not find gainful employment or did not plan their budget well enough to include loan repayments. Generally speaking, a borrower has to have – and prove – mitigating circumstances in order to have their loan payments postponed or forgiven altogether. These instances are rare.

Two options that are sometimes available for postponing repayment of your student loans are deferment (when you can postpone repaying your loan principal and, in some cases, interest) and forbearance (when principal and/or interest payments may be suspended)

Deferments are not granted automatically – you must apply for a deferment and provide documentation to support your request. Deferments are commonly granted for:

  • Students who are enrolled in undergraduate or graduate school
  • Disabled students who are participating in a rehabilitation training program
  • Unemployment
  • Economic hardship
  • Likewise, a forbearance is not automatically granted and required documented proof of extreme financial hardship or other unusual circumstances. For more information about deferments and forbearances, contact the financial aid office at the school that issued the loan or the original lender or current servicer of your loan.

Note that neither deferment nor forbearance is a given. Still, if you are concerned that you will not be able to repay your loan, you should definitely contact your lender to inquire about the possibility of deferment or forbearance. Make sure to make this inquiry before you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

How do student loans work?

If you need to borrow money to help pay for college, it is important to understand how student loans work. Most students are generally eligible for some form of aid regardless of income or financial status. There are several different types of loans; some take your credit score into account while others are based on financial need.

Student loans typically fall into two main categories: private student loans and federal student loans. Federal student loans are more popular. Student loans generally offer lower monthly payments and have lower interest rates than other types of loans. Repayment terms are often more generous, and many don’t require full payments while you are attending school and offer a grace period after graduation before repayment starts.

Student loans are either subsidized, meaning you don’t pay interest until after finishing college, or unsubsidized, where you pay the interest while attending school. Student loans are usually disbursed directly to your school a few set times a year to pay for tuition, room and board, school fees, and other educational expenses. Sometimes the funds are disbursed directly to the student with the understanding that the funds will be used for educational expenses. Student loans are meant to help you close the gap between your scholarships and grants and what college actually costs.

How do I tell the difference between student loans?

There are many different kinds of student loans. First, know the difference between federal and private student loans. You should always use federal loans first. They carry lower, fixed interest rates and often have better terms than private (or alternative) loans. Second, know the difference between the types of loans in your financial aid award.

  • Direct Subsidized Loans: a federal loan for which the government pays interest while you are in school
  • Direct Unsubsidized Loans: a federal loan for which interest accrues while you are in school but may be deferred until repayment
  • Direct PLUS loans: federal loans for graduate students and parents of undergraduate students
  • Private loans: loans from banks or other non-government sources

If you need to use private loans, consider all of the costs. Private loans can have origination fees, different ways of compounding interest, and higher interest rates than government or federal loans. You should also know your credit score. The lower your score, the higher your rate will likely be on a private loan. If you are an undergraduate student, you will almost definitely need a co-signer to be approved for a private loan. Fees and penalties can be higher with private loans than with government-backed or federal loans, and your repayment terms may not be as favorable.

When choosing a student loan, investigate your options carefully. Consider the following:

  • Total cost of the loan (after all of the interest and fees have accumulated)
  • APR, or annual percentage rate, and fees
  • Borrower benefits (such as cash back or interest rate reductions if you make payments on time)
  • Deferment options

How much can I borrow in federal student loans?

how much can i borrow?It depends on the type of federal student loan. Here are the borrowing limits for the most common types of federal student loans by year.


  • Direct – Dependent Students: $5,500
  • Direct – Independent Students: $9,500
  • Perkins: $5,500
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received


  • Direct – Dependent Students: $6,500
  • Direct – Independent Students: $10,500
  • Perkins: $5,500
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received


  • Direct – Dependent Students: $7,500
  • Direct – Independent Students: $12,500
  • Perkins: $5,500
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received

Undergraduate Cumulative Limit:

  • Direct – Dependent Students: $31,000 (only $23,000 can be subsidized)
  • Direct – Independent Students: $57,500 (only $23,000 can be subsidized)
  • Perkins: $22,000
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received

Graduate Students**:

  • Direct – Dependent Students: $20,500*
  • Direct – Independent Students: $20,500*
  • Perkins: $8,000
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received

Cumulative Limit (Undergraduate + Graduate):

  • Direct – Dependent Students: $65,500
  • Direct – Independent Students: $65,500
  • Perkins: $60,000
  • PLUS and GradPLUS: Up to the total cost of attendance, less aid received

Note: These limits are based on a full academic year and your qualifications as a full or part-time student.

**Higher Direct loan amounts are available to students in many graduate medical programs.

How do I know if I need a private loan?

Private student loans are an excellent, affordable way of paying for education costs that are not covered by other aid received from your financial aid office.Many students and families use private loans to supplement other aid and to cover costs associated with the estimated family contribution, or EFC. In some cases, you can also use private loans to cover any outstanding balances owed to your school.

Is there a credit check for private student loans?

Yes. Private loans are personal loans issued to individual borrowers by lending institutions. Much like a mortgage or an auto loan, your credit will determine if you are approved and also what rate (and possibly fees) you may receive. These loans are not guaranteed by the federal government and therefore are treated like any other consumer loan, but with a special purpose. Additionally, most lenders will require the presence of a credit-worthy co-signer or co-borrower whose credit will also be checked.

Do you need a co-signer for a private student loan? What do you think?

College on the Cheap’s street team asked students if they need a co-signer to apply for a private student loan. Not many of them knew – think you do? The answer might come as a surprise; check out the video to learn more.

Am I eligible to borrow a PLUS loan?

There are some requirements parents and children must meet for the parent to be eligible to borrow a PLUS loan.


  1. Must be a parent (or step-parent or adopted parent) of a dependent student
  2. Be a U.S. citizen or eligible non-citizen and provide a valid Social Security number
  3. Pass a credit check
  4. Cannot be in default on another federal student loan or owe a refund on any federal student aid program


  1. Must be enrolled at least half-time
  2. Must be less than 24 years of age
  3. Must have NO dependents
  4. Cannot be in default on another federal student loan or owe a refund on any federal student aid program

Can legal guardians take out Parent PLUS or private loans?

Legal guardians may not borrow a PLUS loan. Private loans are an option for credit-worthy individuals or majority age willing to take on the financial responsibility of the loan.

What if I have a “messy” financial situation; should I make colleges aware if it?

Yes, but be careful about timing. If the financial complications are caused by an act of nature such as an earthquake or hurricane, let the college know about it immediately. But if the complications come from legal issues or credit card debt, avoid revealing this until the student is admitted – then share the information with the college. Difficult, entangled financial situations require staff time to sort out. So colleges may simply choose to avoid the problem by not admitting the student. Keep it “off the table” until the student is actually admitted to a specific college or colleges.

I’m not sure I will be able to return to college in the fall, as my family’s finances have changed drastically. What can I do to stay in school?

Unfortunately, financial pitfalls and collapses can strike at any time, even despite the best of preparation. It’s not terribly uncommon for students to be thrown into a state of financial uncertainty while they’re in college, and it can be difficult to sort through the financial issues in time to cover the next tuition bill. If this happens to you, here’s what you should do.

Talk to your financial aid office. Explain to them your financial situation, and emphasize that it’s pretty dire. Show them financial cause and keep a line of communication open with your aid officer: with any luck, you will be able to work something out that enables you to keep attending school until you’re back on your financial feet again. They will understand that you are in a financial emergency, and should be willing to help.

If the aid office is not helpful, or you still need more to cover costs until your finances are back online, explore other sources of funding. Hunt for scholarships and other aid options. Exhaust your federal aid options, and if you need to, consider a private student loan.

Nobody wants to experience dire financial straits, but it happens, and often without warning. Have a backup plan just in case everything goes south, both for day-to-day finances as well as tuition. Here’s hoping you’ll never have to put that plan into place.

I am divorced; do I have to enter my former spouse’s financial data on the financial aid forms?

No. Provided you are the custodial parent, only your financial information will be required. Colleges requesting the PROFILE will want your former spouse to complete a Non-Custodial Parent Form.

I am divorced, but I have remarried. Does my current spouse’s financial information have to be entered on financial aid forms?

Yes. Any pre-nuptial agreements will have to be discussed with the college the student actually attends. The college has full discretion as to how they will react to such arrangements. It may depend upon the extent of the former spouse’s ability to pay for college expenses.

How can I budget my personal expenses in college?

As a college student, it’s very easy to spend money – often money that you don’t have, so budgeting your money out is an extremely important financial strategy. One good budgeting strategy is to set up a ‘college’ checking account. Put a fixed amount of money from your savings into your college checking account – you can do this either at the beginning of a semester (about $800), or at the beginning of every month (around $200). This way, you have a clear limit on your spending money. Don’t dip back into your savings if you run out unless it’s absolutely necessary. Stick to this strategy, and you should see your money lasting longer; plus, you’ll develop responsible spending habits, which will be important to have after college.

Should a college student have a credit card?

man with credit cardGiving a college student a credit card is a decision that must be made on an individual-family basis. Instead of giving a yes or no answer, here are the pros and cons of both options.

If you DO choose to get a credit card:

  • You can establish good credit.

Doing this requires being very responsible with both your spending and bill paying. Find a card with no annual fees and a low interest rate. Pay off your balance each month – at least pay substantially more than the minimum. Don’t loan your credit cards to anyone. Report a lost or stolen card immediately.

  • You will have a back-up plan in case of emergency.
  • You run the risk of overspending. Overspending leads to the inability to pay bills, which leads to debt, which leads to bad credit…and it only gets worse from there.

If you choose to NOT get a credit card:

  • You avoid all risk associated with over-charging and skip the hassle of credit card payments.
  • You avoid the risk of impulse purchases on credit.

You do not gain the benefit of establishing good credit that you would if you were to be a conscientious credit card holder.

  • You do not have a personal safety net in the case of an emergency that requires spending beyond what you have sitting in your checking/savings accounts.

General Student Loan Topics

Borrowing Advice


Miscellaneous Financial Aid Topics