BY JOHNATHAN D. KINDALL

ollege is expensive, and while scholarships, savings, aid and other awards are great, they unfortunately don’t cover the full cost for many students out there. That’s why, in the United States and elsewhere, student loans are a common way to supplement the cost of higher education.

We know that committing to a student loan is a big decision to make while you’re still in high school. However – for better or for worse – student loans are a fact of higher education. It's estimated that about 55% of Bachelor’s Degree recipients graduating from four-year public and private nonprofit colleges in 2020 had some form of student loan debt when they graduated, and that number is only going up.

So, if more than half of all college students will interface with student loans during their time in college, it’s important to TeenLife to make sure that students know what they’re getting into and how to best prepare themselves for college and beyond. Remember: student loans, no matter the type, consist of money that you borrow and must pay

back with interest, so be sure to consider your options carefully before committing to a loan or to a college.

Below, you’ll find a brief overview of the different types of student loans that are available to students and their families. It’s meant to be an introduction to the topic – not a comprehensive guide. Once you’ve taken a look at the different kinds of loans available then, talk with family, friends or even a financial advisor to do more research on what kind of student loan, if any, is right for you.

A majority of student loans in the United States are handled by the U.S. government. These loans are made with the U.S. Department of Education as the lender, and almost always have better terms and benefits than private student loans. To qualify and apply for federal student loans and other types of federal aid, students must complete the Free Application for Federal Student Aid, or FAFSA, each year. There are a few different types of federal student loans to know about: • Direct Loans (Subsidized and Unsubsidized):

Commonly referred to as Stafford Loans, money for these loans comes directly from the United States government. In a subsidized loan students are not required to make payment until six months after they graduate college, and the federal govern-ment pays the interest on the loan for that period. In an unsubsidized loan, payments are still not due until after graduation, but the student, not the government, is responsible for the accumulated interest on the loan. The maximum amounts, interest rate, and repayment plans for direct federal student loans varies based on need, income and a whole host of other factors.

• PLUS Loans: PLUS loans are available to parents of dependent undergraduate students as well graduate students. These two types of loans are referred to as Parent PLUS Loans and Grad PLUS Loans respectively. Unlike direct student loans, PLUS loans have flexible maximum amounts and can be used to cover education costs not covered by other financial aid.

• Direct Consolidation Loans: Many students who take out student loans will receive them from a different borrower depending on the year or semester.

This results in some students having up to a dozen different loan payments due every month after graduation. A direct consolidation loan is a way to simplify the repayment process for students who have already graduated. As the name implies, these loans let students make one payment to one servicer every month.

If more assistance is needed, students and their families may consider a private student loan, also referred to as an alternative education loan. These loans do not come from the government and are instead offered through various banks or credit unions. Familiar names in this space include Sallie Mae and Citizens Bank.

Private education loans require a credit check for eligibility, resembling other types of personal loans more than they do federal ones. Private education loans have higher interest rates and are never subsidized – meaning that students are responsible for paying any and all accumulated interest. Some require payments while students are still in school, and deferment and forbearance options are limited. For these reasons, private education loans should typically only be considered once all federal options have been exhausted.

That being said, the industry is growing, and many students might not have other options. Right now private student loans only account for about 9% of all student loans debt, but since 2012 the industry has outpaced credit cards, automobiles and almost all other forms of consumer loans. If you are considering a private student loan, be sure to do your research on interest rates, repayment plans and more.

Johnathan Kindall is the Content Editor at TeenLife Media. He attended Boston University’s College of Communications, graduating in 2020 with a Bachelors of Science in Journalism. Johnathan is dedicated to launching teens into life by providing them with resources that help them navigate the often intimidating world of college applications and higher education. You can find more of his work at the regularly updated TeenLife Blog.