The Lowdown on Loans

Taking out loans is a big deal. It’s important to get the education that you need, but nonetheless, it’s an expensive investment. So what do you need to know about student loans?

According to Forbes, the total student loan debt of the U.S. is now over $1.5 trillion and shared by nearly 45 million people. Student loans can seem endless and overwhelming, which causes many young adults to make the wrong financial decisions. Learning about student loans can help you avoid unnecessary debts, and use them to benefit you in the long-run.

In 2015, nearly 70% of seniors who graduated from public and non-profit colleges had student loan debt.

1. Types of student loans
Federal student loans are funded by the federal government, and private loans are offered by lenders like banks, credit unions, state agencies or universities. If you need to borrow money to invest in your education, start with federal loans. Federal loans often provide several advantages:

• You don’t need to repay the loan while you’re in school, while most private loans require you to repay while you’re still in school
• Low interest rate compared to private loans
• Some federal loans are subsidized (learn more below)
• You don’t need a cosigner
• Many repayment options

Subsidized loans vs. unsubsidized loans

Subsidized loans: The U.S. Department of Education pays the interest of your loans while you’re in school for at least half-time and for a grace period, if you are an undergraduate student with financial need.
Unsubsidized loans: You need to pay for the interest of your loans.

2. How do I apply for loans?

In most cases, students don’t need more than federal loans. To apply for federal loans, you simply fill out your FAFSA online, and you will be notified of your application process and status through ASU. To learn more about how to fill out your FAFSA, stop by the TRIO Office.

3. How to pay off my student loans?

Your education is important, but learning how to repay your student loans consistently and efficiently is equally important for your future success. If you default on your student loans, you might not be able to take out other loans, including auto or mortgage loans. Because of this, it’s critical to start paying off your student loans as soon as possible.

• Find the right repayment plan
  • There are different repayment plans, some of which are based on your income level, others simply a fixed amount for a fixed period of time. Finding the right repayment plan for your situation is crucial to paying off your loans.
• Connect with ASU Career and Professional Development Services
  • ASU Career and Professional Services can help polish your resume, and give you advice/resources to help you land the dream job. Finding a well-paying job that you're passionate about is one of the best ways to make enough money to pay off your loans following graduation.
• Schedule auto pay
  • Similar to other bills, scheduling auto pay could save you from forgetting to make payments. Some lenders also give you an interest reduction when you enroll in auto pay. Make it easier; save yourself some time and money.

Every person's student loan journey is different, which is why it's important to understand what makes the most sense for you and what will give you the best possibility for success.

— By Wynona Benson, Communication, MS ‘20