Student Loans for College

A student loan is money borrowed to pay for school and repaid with interest. There are two types of student loans:

Federal student loans, which come from the U.S Government.

Private student loans, which come from private entities such as a bank or credit union.

They are available for undergraduates, graduate students, parents, and some trade school students.

Learn more about how student loans work.

Eligibility for federal student loans is determined by the FAFSA (Free Application for Federal Financial Aid) and some is based on financial need.

Eligibility for private student loans differs according to the lender but factors usually include credit, financial history, and enrollment status. Most undergraduates will need a cosigner since they don’t have the credit history or income requirements to qualify on their own for a student loan.

Student loans are one way to pay for school. Here’s the typical order for securing financial aid, including when to consider taking out student loans.

1. Start with money you don’t have to pay back. Such as: contributions from family, income and savings, grants and scholarships.
2. Then, look at federal student loan options, which have low fixed interest rates come with special benefits not available on private loans.
3. Lastly, consider a private student loan if funds are still needed to cover costs.

Learn more about when to take out student loans.

Many undergrads don’t have the credit history they need to take out a loan on their own, so it can be a good option to find a cosigner.

Finding a cosigner who has a good credit history can increase your chances of qualifying for a private student loan and even help lower interest rates. The cosigner shares the same responsibility as the student to pay back the student loan.

Learn more about becoming or finding a student loan cosigner.

When you graduate from school or drop below half-time enrollment, you have a period of time where you aren’t required to make full principle and interest payments on your student loan. This period is called the grace period.

For our undergraduate student loans, College Ave offers a six-month grace period. For most graduate student loans, the grace period is nine months.

Learn more about how the grace period works.

Interest rates are the cost of a student loan. Federal and private student loans offer different rates.

Federal student loans come with a fixed rate, which stays the same throughout the life of the loan. It is set at the start of each academic year in July.

Private student loan interest rates can be fixed or variable, which change according to market forces. Private lenders determine the interest rate based on market factors and the student’s (and cosigner’s) creditworthiness who is borrowing money.

With College Ave, you can get a 0.25% interest rate reduction if you set up auto-pay for your student loan payments. See how to set up automatic payments to get your 0.25% interest rate reduction.

Learn more about the difference between fixed and variable student loan interest rates.

A repayment term is the length of time you agree to repay your student loan.

The longer the term, the lower the monthly payment but the more the loan will cost overall. The shorter the term, the higher the monthly payment will be and the less the loan will cost overall.

Federal Student Loans come with a standard 10-year term.

Different private lenders have their own terms. College Ave has varying repayment terms ranging from 5 years to 15 years depending on which student loan you select. You choose your repayment term when you apply for your College Ave student loan.

To apply for federal student loans, fill out the FAFSA as soon as it becomes available each year.

The federal deadline is June 30^th each year. There are different state and school deadlines, which are earlier, so be sure to check.

To apply for private student loans, choose a lender and then fill out their application.

Students may apply for private student loans year-round. Typically, June to August are the most popular times for student loans covering the fall semester.

For certain federal student loans, interest charges and loan payments are suspended. Repayment will restart 60 days after the court cases are resolved or June 30, 2023, whichever comes first. For the most up-to-date information about the COVID-19 relief for federal loans, visit the federal student aid website.

College Ave is dedicated to providing help for you if COVID-19 has affected your ability to make payments. Please contact us immediately to discuss your options.

Federal student loans come from the U.S. government and are awarded based on financial need. Private student loans come from private entities such as banks and are based on credit and other financial factors.

Should I take out federal student loans?

If you need to borrow to cover college costs, students should borrow federal student loans in the student’s name first. Federal student loans have low fixed rates and come with unique benefits such as income based repayment plans and loan forgiveness, not offered on private student loans. If you need additional money to cover college costs, private student loans are one option to consider.

Read more to understand the differences between federal vs. private student loans.