Types of federal student loans While there are many ways to pay for college, federal student loans are one of the most popular options. These loans offer flexible payment options and often have low interest rates. The federal Direct Loan Program offers a few loan types.
Federal and private are the main types of student loans. Between the two, federal loans are far more common: In the third quarter of 2022, private student loans accounted for only 7.2% of all outstanding student debt.
It's important to choose between federal vs. private student loans, as each has different interest rates, repayment terms, hardship options and fees. In most cases, federal student loans are preferable because of the benefits they come with.
Is Sallie Mae trustworthy for loans? Sallie Mae earned an A+ from the Better Business Bureau, and the company has been offering student loans since the mid-20th century. It has FDIC insurance for the other financial products it offers customers including credit cards, personal loans and savings accounts.
If those monthly payments look low compared to what most borrowers pay, it's because most borrowers carry a lot more than $20,000 in student loan debt. As of March 2023, the average federal student loan debt in the United States was about $37,720, according to a BestColleges analysis of Education Department data.
Only a small percentage—about 6% of borrowers—owe $100,000 or more. Nationally, the average student loan balance per borrower is $39,032, so if you have $100,000 in student loan debt, you have about 2.5 times the national average balance. But your loan principal is just one part of the problem.
The average student loan debt amount is slightly over $30,000. However, many borrowers owe $50,000 or more in student loan debt. This isn't impossible to overcome using the right repayment methods.
If there is one thing to take away from this article, it is FEB — Free, Earned, Borrowed. You'll want to accept financial aid in this order, starting with any free money, then earned money, and then borrowed money. Accepting aid this way will help you minimize the amount of debt you incur.
Federal loans generally have more favorable terms, including flexible repayment options. Students with "exceptional financial need" may qualify for subsidized federal loans, while unsubsidized loans are available regardless of financial need.
The lower interest rates and a wider array of options on private student loans can make them a flexible way to fund college costs. But if you're looking for more control to decide how and where to use loan funds, a personal loan might be the better option.
NMLS # 1681276, is referred to here as "Credible." If you racked up $30,000 in student loan debt, you're right in line with typical numbers: the average student loan balance per borrower is $33,654. Compared to others who have six-figures worth of debt, that loan balance isn't too bad.
Two common types of loans are mortgages and personal loans. The key differences between mortgages and personal loans are that mortgages are secured by the property they're used to purchase, while personal loans are usually unsecured and can be used for anything.
Most college students can qualify for student loans, but some programs and lenders may not be available to you based on your situation. Understanding the requirements upfront can help you determine which loans to apply for.
A great way to pay off your $100,000 loan faster and save money on interest is to refinance your student loans. This involves taking out a new loan with lower interest rates and/or more favorable terms than the original loan. Refinancing could save you thousands of dollars over the life of your loan.
For example, if you take out a $70,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $742. But if you pay off a $70,000 student loan in one year at a 14% APR, your monthly payment will be $6,285.
As of 2023, there are one million federal student loan borrowers who owe $200,000 or more, according to StudentAid.gov. The good news is that even though paying off such a large balance can be difficult, it's not impossible. You can refinance your loans or add a cosigner to improve or lower your interest rate.
Depending on your loan type and repayment plan, you could be in debt for 10 to 30 years. So, how much is too much student loan debt? The Consumer Financial Protection Bureau recommends borrowing no more than you expect to earn in one year from an entry-level position after graduation.
The maximum amount you can borrow each academic year in Direct Unsubsidized Loans ranges from $5,500 to $12,500 for undergraduates, depending on your year in school and your dependency status. Direct Unsubsidized Loans have an annual limit of $20,500 for graduate or professional students.
Request Additional Federal Student Loans
If you've exhausted other options and still need additional funds to help you pay for school, contact your school's financial aid office to find out if you're eligible for additional federal student loans.
Cons Explained
No refinancing option available: Certain lenders offer student loan refinancing, but Sallie Mae does not. Limited repayment terms: Sallie Mae only offers repayment terms of 120 to 180 months.
If you signed up for a Sallie Mae loan when you entered college, you may have a high interest rate because you were a college student with no credit history and no full-time income. If you have a stable job and a good credit score now, you'll likely be eligible for a lower interest rate.
Typically, prequalifying for a student loan includes a soft credit check, which does not affect your credit score. Thus, if you apply for a loan with Sallie Mae, a hard credit check will be done, which could temporarily hurt your credit score.