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It is no surprise that attending college in the United States is a pricey endeavor. In fact, the cost of college has risen dramatically over the last couple of years, making it more financially inaccessible without financial aid.

Scholarships, like those offered through, are utilized by college students all over the country to fund their postsecondary education. It is a great resource that alleviates some of the heavy financial burdens that come with the cost of college.

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In addition to scholarships, student loans are the most popular form of financial aid students use to afford college. While scholarships are helpful, the reward is not always enough to cover a full academic year at your university.

However, student loans are borrowed from either the federal government or private loan servicers. These lenders provide eligible borrowers access to a sufficient amount of money that can be used to pay for their college tuition or any other related expenses.

Currently, there are roughly 42.8 million student loan borrowers in the United States alone. Specifically, the average public university student takes out $32,000 to receive their bachelor's degree. This number fluctuates depending on the school and loan type.

You may need student loans to attend college. To help lessen the number of student loans you take out, create a profile and use the scholarship search feature to access hundreds of exclusive scholarships.

Unfortunately, this increase has led to a nationwide student loan debt crisis. Together, Americans owe $1.617 trillion dollars in federal student loan debt, which does not account for the remaining amount in private loans. Given the magnitude of outstanding federal student debt and high-interest rates, education debt can be incredibly difficult to pay off.

These outstanding student loans have been with millions of borrowers for years. Although not all student loan debt statistics are published due to privacy reasons, roughly 6.4 million of those in student debt are aged 50 to 61 years old.

How do I apply for student loans?

There are two different types of student loans: private and federal. The application process required will largely depend on the loan type. Identify which one you are gearing towards to fulfill the necessities.

Check out this comprehensive guide on how to take out student loans.

Federal student loans

To apply for federal student loans, you will need to complete the Free Application for Federal Student Aid (FAFSA). As federal loans come from the government, this form is used to determine how much aid you are eligible to receive so that the school can offer an appropriate package.

The application will consist of filling out information pertaining to income, assets, and other financial resources. You will also need to include your family's information if you are still dependent on their taxes.

It is best to start this form as soon as it is released in late October because financial aid, including student loans, can be offered on a first-come, first-serve basis. Remember that the FAFSA is due every year you are enrolled in school, so mark this important time on your to-do list.

Private student loans

Unlike federal loans, private loans come from various lenders, so it is hard to give a definitive answer.

Often, you will need to contact the servicer directly to apply. They are issued by private organizations such as banks and credit unions. Instead of an application like the FAFSA, you might have to submit a few extra documents.

Private student loans usually require a co-signer and may have different eligibility requirements and terms than federal student loans.

Always compare offers from multiple lenders and carefully review the terms and conditions of any loan before fully accepting it.

Have student loans already? Check out these grants to pay student loans today!

What is the student loan interest rate?

Whether it is a private or federal student loan, you must pay it back with interest. However, the interest rate will differ between the two and depend on when it was borrowed.

Check when interest starts accruing on student loans to learn how interest accrues.

Federal Loans

Currently, there is a payment pause, so borrowers are not responsible for any interest on Direct subsidized and unsubsidized loans until that pause is over. All federal loans taken on or after July 1, 2002, and before July 1, 2023, have these fixed interest rates:

  • Undergraduate students with direct subsidized and unsubsidized loans: 4.99%
  • Graduate or professional students with direct unsubsidized loans: 6.54%
  • Direct PLUS loans: 7.54%

With federal loans, the interest you are charged for these loans will stay stagnant for multiple years. Due to this, federal student loans can be cheaper than private loans.

Private loans

The interest rates on private loans are typically higher than Federal loans and will depend on the lender, including other financial factors. The rate you receive might be assessed using your credit score as well as the loan amount.

Unlike federal loans, some private student loans may have a variable interest rate, meaning that the rate will cause monthly costs to fluctuate throughout the loan. The average interest rate is between 4% to 15%.

Make sure to carefully assess the terms and conditions underlined in any student loan you are applying for, including the interest rate, before finalizing any decisions. You may want to consider whether the interest rate makes monthly student loan payments affordable, given your income and future expenses upon graduating.

Learn how student loan payments are calculated today to better understand student loan payments.

Frequently Asked Questions

Can I lower my Interest Rate?

Yes, absolutely. By saving money in interest charges, a lower rate will help you reduce monthly payments and discharge your payments quicker. Borrowers can take a few courses of action to lower their interest rates.

Automatic Payments

Both private and federal loans offer a discounted rate if you set up automatic payments, where the money is deducted by itself every month. These discounts vary depending on the loan source but can lower the overall interest rate by a 0.5 percentage point.


The best way to lower an interest rate is refinancing your loan with a new lender, one with a lower interest rate. The benefits of the new loan could reduce your rate drastically and consequently save you a lot of money in monthly payments.

If you are contemplating this option, make sure to speak with your lender and see if it is the right fit for your loan. While there are no cons of exploring this route with a private loan, you can lose some of the specific benefits associated with federal student loan debt.

Build your credit

Improving your credit history can potentially qualify you for a lower interest rate. Take some time to focus on increasing your credit score to be in the range most lenders are looking for.

In the meantime, you can try to find a co-signer with established credit. If they have an adequate score, it could make you more qualified for a loan with a lower interest rate. Make sure to keep in mind the rules and regulations co-signers are expected to abide by.

Overall, every loan is different and should be approached accordingly. Some loans might also offer some loyalty discounts, so speak to your lender on any potential opportunities to save money. Carefully assess your options before settling on one too quickly.

What Happens if I Miss a Student Loan payment?

Fulfilling monthly payments by the due date is incredibly crucial with student loan payments.

The day after the expected due date, the loan account is deemed delinquent until it is accounted for either by payment or through another arrangement. Depending on your loan, your lender might also charge you a late fee.

While it is not ideal, payments that are late by a day or two will not be severely penalized. However, if this schedule persists consistently, you risk being reported by your lender.

If the delinquency status remains on your account for over 90 days, it will be reported to the credit bureaus. These payments will be showcased on your credit report and might knock down your credit score by a hundred points - negatively affecting your ability to make purchases requiring a credit check beforehand.

After 270 days, the loan will be in default which may result in more than just credit damage and late fees. This could prompt authorities to enforce penalties such as wage garnishment, collection costs, as well as tax refund seizure.

You may also lose access to federal loan benefits such as deferment, forbearance, and income-driven payment plans. Always reach out to your provider as soon as you are having trouble paying payments to take advantage of these benefits that exist to help.