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Student Loans 101
The financial aspect of college can be daunting.
Whether you’re beginning your first semester of college in the fall or only have a few semesters left before graduation, you may be wondering how you’ll cover costs for the upcoming school year.
Evaluating which options are best for you and making informed decisions will put you on the path to a successful journey!
What Are the Different Types of Student Loans?
Generally, Federal Student Loans and Private Student Loans are the primary types of student loans.
Federal Student Loans are funded by the Federal Government via subsidized or unsubsidized loans:
Federal Subsidized Loans are based on financial need. The Federal Government generally pays the interest that accrues during certain periods based on the student’s status and/or varying factors.
On the other hand, with Federal Unsubsidized Loans, the borrower is fully responsible for paying the interest regardless of the loan status. Interest on an unsubsidized loan accrues from the date of disbursement and continues throughout the life of the loan.
Private Student Loans are offered by lenders such as banks, credit unions, schools, and entities other than the Federal Government.
Federal Student Loans vs. Private Student Loans
| Feature | Federal Student Loan | General Private Student Loan | ECU Private Student Loan* |
|---|---|---|---|
| Lender | U.S. Department of Education | Banks, Credit Unions, or other private lenders | Eastman Credit Union |
| Borrowing Limits | Annual & aggregate limits based on year & status | Up to the full cost of attendance based on credit | Can cover tuition, room & board, books, fees, and other expenses |
| Interest Rate | Fixed; set annually by the government | Fixed or variable; based on credit | Fixed; based on credit |
| Interest During School | Subsidized: Government pays; Unsubsidized: Interest accrues | Interest usually accrues from disbursement | You’ll make interest-only payments until after graduation |
| Repayment Start | After graduation or dropping below half-time | Varies by the lender; often starts while in school | Full principal & interest payments start after graduation |
| Grace Period | Most Federal Loans offer a 6-month grace period | Varies by the lender | Up to 6 months after graduation (interest-only payments are still required during this time) |
| Repayment Plans | Standard Federal repayment is 10 years; other available options, including income-driven plans | Varies by the lender; likely limited and less flexible options; usually fixed monthly payments | Flexible terms and financing options, with up to 25 years financing available |
*Certain restrictions apply.
Remember, all loans are not the same, and changes can occur at any time, so always be mindful of loan requirements when applying.
How Can ECU Help?
Many times, the amount of Federal Student Loans you receive may not cover your full costs. A private student loan from ECU can bridge the funding gap between scholarships, federal loan options, and your total educational expenses. With low fixed rates, interest-only payments until after graduation, no application fees, and so much more, ECU is here to help you on your journey! Click here to learn more about ECU student loans and invest in your future today!