Picking the right student loans for you can be tedious. I was fortunate enough not to need to take out any student loans, but that doesn’t mean I didn’t learn a thing or two about types of student loans from my friends. 

I have a friend who, for the sake of this story, will be called Jane. Jane decided she wanted to go to school for teaching. The problem was that the school she decided to go to cost more money than a teacher would hope to pay off. Her student loans came out to roughly six figures in debt. Although this might be a norm, considering that she will not be making all that much, deciding to take out that much in loans seems to be causing her a ridiculous amount of stress. I mean, who wouldn’t be stressed staring down the barrel of $100,000 debt on a teacher salary. 

We all have our dream school and our dream job, but sometimes they don’t line up. Picking the right school to fit your needs now and your future needs will help lessen the blow of student loans later. But we can talk about finding the right fit for what you want at a later date. 

College is something that helps us get the jobs we want in life. Without a degree, it can be hard to find work. While this may be true to some extent, college is expensive. How do you go about getting the money for school? 

Some pay for it out of pocket, others have scholarships, but most have student loans. Oh, and then there’s the whole confusing mess that is financial aid and FAFSA. 

The thing with financial aid is that it can be a godsend to those who get enough to cover most of their tuition or at the very least a nice portion of it, but what happens when financial aid doesn’t come through to help? Do I have to pay my entire tuition cost out-of-pocket or take out a loan with a super high-interest rate? What’s the deal, and why is this so stressful? 

I know it can seem overwhelming so let’s take it one bit at a time. Let’s break down the different kinds of student loans. 

Types of Student Loans

Direct Subsidized Loans

A direct subsidized loan is a loan that while you are in school (at least half time), the government is paying the interest for you and also during your postgraduate grace period. But once you start repaying the loan, they stop. Basically, when you are in school and have this type of loan, you are not responsible for paying the interest. This loan is given out only on a financial need basis and is determined by the school you attend. Direct subsidized loans are usually found in your financial aid package from the school. (This is why filling out FAFSA is so important!) 

Direct Unsubsidized Loans

A direct unsubsidized loan is the opposite. You are responsible for the interest the moment the money hits your account. So once you start repaying the loan, you are paying them back the original amount and the interest accrued over time, which can really add up.

Private Student Loans

These loans are usually taken out by the student (with the help of a cosigner) and have less repayment protection than federal loans. Unlike the other loans mentioned above, many private student loans require payments while you are still in school. They also require the signee to have the appropriate credit background to qualify for the loan; otherwise, you will need a cosigner. This option should be used as a sort of last resort. 

Exceeding your federal student loan allowance or not having enough scholarship money to cover your full cost of the semester can kind of be a bummer, but private student loans can help cover the remaining costs. Just beware; lenders are willing to give you way more than you will need, and while the bigger chunk of money might look a lot nicer, remember that you have to pay it all back. 

To Sum it Up

Student loans are stress-inducing. I mean, you are signing up to receive a large chunk of money that you will then have to repay later on, but what 18-year-old is worried about that? 

Hopefully, having even a basic understanding of what options you have out there can help ease the anxiety of money when it comes to school. There are so many options between loans, grants, and scholarships that all it takes is setting aside time and doing a bit of research. (You can check this website out, for example.) And if you’re still in high school, connect with your guidance counselor. They can help you find all kinds of scholarships and grants to apply to. 

How are you paying for college/technical school?

P.S. We know being in college means broke all the time. So, here are 5 tips to help you save some money along the way.