Introduction to Student Loans PDF Print this Guide Email this Guide
Contributed by Alex Robb   
After qualifying for financial aid, you may still need additional financing.  Thank the Department of Education and Congress for stepping in to help us out.

If you read through our Finances section on CollegeCodex.com, you’ll learn that students can fill out a FAFSA and apply for financial aid through the government.  Financial aid is not the same as a scholarship—you will have to pay it back with interest—but interest will not begin accumulating until months after you’ve graduated.  Typically, graduates are into a professional job by the time their first payment is due.

The government’s financial aid program is exceptional; easy money, low rates, plenty of time to pay it off.  Unfortunately, for many students across the United States, the government will not cover all expenses associated with college living.  Because of this problem, students (and their parents) have to find a student loan from a bank, lender, or other provider.  We’ll talk more about getting a loan later on in these guides.

Paying for college in 5 steps

  1. Search for scholarships and grants
  2. Fill out the FAFSA
  3. Learn about the Student Aid Report (SAR):  A few weeks after you submit the FAFSA form, the Department of Education sends a letter to show your financial aid eligibility and the EFC (Expected Family Contribution, how much your family to expected to pay for college)
  4. Receive your Award letter:  This letter will show an estimate of how much it will cost to go to college for a year:  tuition, room and board (even if you’re not living in the dorms), fees, basic living expenses.  The Department of Education will rarely cover all expenses for college.  The rest of the expenses must be paid by you and your family.  If you’re unable or unwilling to pay the rest of the expenses yourself, get a student loan (most people do).
  5. Apply for student loans:  College students love student loans because they have very low interest rates, do not have to be paid back until after you graduate, and they can be consolidated with other student loans to save money.  Even if you may have four separate student loans after graduation—with four separate monthly payments to worry about—consolidation allows you to combine all loans into one, at a great interest rate.

Next step:  Finding a Student Loan
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