Skip to main content

Education Center

College Student Studying

Student Loans, a Breakdown

Tuesday, July 16, 2019


Read Time: 2 mins

School can be expensive. When it comes to continuing your education, the prices can add up quickly. Most people don’t have the option to pay out of pocket. This is where grants, scholarships, and student loans come in. We’ve broken each one down to help you decide which option is right for you.

Grants and scholarships.
Grants and scholarships should be the first step in the process when looking to pay for school. Grants are need-based while scholarships are typically merit-based. Both are options to pay for your schooling that you don’t have to pay back. (Free money!) Check out the U.S Department of Labor to see what scholarships you may qualify for.  

Student loans.
After grants, student loans are used to help pay for college. Student loans are used to help you pay for school expenses such as tuition, books, and living expenses. There are two types to look at, federal and private.

Federal loans are offered to students through the federal government. These often have lower interest rates and payment plans that can be adjusted. Rejections are also rare with federal loans.

Private loans are loans taken out through either a bank, credit union, or other financial institution. Private loans will typically have higher interest rates and their own set of conditions that must be met. Approval may be more difficult due to credit review.

Subsidized or unsubsidized.
Another aspect to consider is whether or not the loan is subsidized or unsubsidized. Subsidized student loans help you out while your loans are in deferment. While your loans are deferred, you don’t have to worry about the interest accruing; the government will take care of that. With unsubsidized loans, it is entirely your responsibility to repay the interest that accrues while you are in school.

To help you out with the differences:

Topic Federal Private
Payments Due Payments don’t become due until you graduate, leave school, or change your status from a full-time student to a part-time student. Private loans will typically require you to make payments while you're attending college. 
Interest Rate Interest rates are fixed and for the most part much lower than private loans. Interest rates may be variable, or higher than federal loans.
Subsidies Depending on your situation, you may qualify for a subsidized loan. This means the government will pay interest while you attend school. Most private loans will not be subsidized, this means you are required to pay all interest on the loan.
Credit Check No credit check needed. A credit check is required. Lender may want to see an established credit history or a cosigner.
Consolidate and Refinancing  Loans can be consolidated. Can’t be consolidated but can be refinanced.
Repayment Plan Several types, including an income-based option. Check with your lender to determine options.
Loan Forgiveness May be eligible for forgiveness for public service. Private lenders do not offer loan forgiveness.
Postponement If you are having difficulty paying, you may be eligible for a temporary postponement or lowered payment. Check with your lender to see the options they have.

With the rising cost of tuition, books, and housing, you may not be able to afford it on your own. With the information provided, you can hopefully make a more informed decision as to how you want to proceed with your education.

For more information on student loans, please visit

AllSouth strives to keep its information accurate and up to date. This information may be different than what you see when you visit the mobile app provider or specific product’s or service’s site.