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Almost 30 states in the United States offer free community college programs based on income, merit, geography, etc. Here are those states:

Is Community College Free? Yes If You Live in These States

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Abigail Eun

<p>College is a special four years of your life, and you’ll want to make the most out of your experience. Here’s the ultimate college bucket list to make memories that will last you a lifetime.</p>


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<h2 id="h-1-study-abroad" class="wp-block-heading"><strong>#1: Study Abroad</strong></h2>
<p>Studying abroad can be a once-in-a-lifetime experience. Not only do you get to study in another country with your friends, but you get the chance to immerse yourself in a new language, with new people, and a new culture.</p>
<p>It’s a great opportunity to escape your comfort zone and put yourself out there.</p>


<h2 id="h-2-eat-at-every-local-restaurant-in-town" class="wp-block-heading"><strong>#2: Eat at Every Local Restaurant in Town</strong></h2>
<p>Spend your four years in college getting to know the city you’re inhabiting.</p>
<p>While it is a hefty goal, aim to hit every food spot available, whether it’s an ice cream shop, an Indian restaurant, or a brewery. It’s a great way to get to know the food scene in your college town and can be a great bonding opportunity for friends.</p>


<h2 id="h-3-go-on-a-road-trip-with-friends" class="wp-block-heading"><strong>#3: Go On A Road Trip With Friends</strong></h2>
<p>Develop your lifelong friendships by going on a road trip. Whether you’re going on a short trip to the mountains or the beach, road-tripping is a great way to bring your friend group together, make memories, and explore the state you’re in.</p>


<h2 id="h-4-make-the-dean-s-list" class="wp-block-heading"><strong>#4: Make the Dean’s List</strong></h2>
<p>While the college experience might be all about making unforgettable memories and having fun, remember the reason that you’re there in the first place is to learn.</p>
<p>Making the dean’s list is a great way to challenge yourself academically and dedicate yourself to your studies. It’s an attainable goal if you put in the hard work, and the benefits of it are definitely worth it.</p>


<h2 id="h-5-dye-your-hair-pierce-something-or-get-a-tattoo" class="wp-block-heading"><strong>#5: Dye Your Hair, Pierce Something, or Get a Tattoo</strong></h2>
<p>College is one of the only periods in your life when you can make crazy decisions without being judged too harshly. Take the chance and do something crazy. Whether you dye your hair bright pink, pierce your ears, or get your first tattoo, it’ll be a look to remember.</p>


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<p>If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking <b>Apply</b> below.</p>


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<h2 id="h-6-enjoy-your-student-discount" class="wp-block-heading"><strong>#6: Enjoy Your Student Discount</strong></h2>
<p>Your .edu email can save you some money on your next <a href="https://www.asos.com/us/discover/students/asos-on-campus/student-validation/">ASOS</a> or <a href="https://www.drmartens.com/us/en/student-discount">Dr. Martens</a> purchase. Certain stores and online subscriptions give you a discount just based on the fact that you’re a student. Go save some money!</p>


<h2 id="h-7-apply-for-your-first-credit-card" class="wp-block-heading"><strong>#7: Apply For Your First Credit Card</strong></h2>
<p>Getting your first credit card is an important step to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">building a strong credit score</a> and history in college. Now that you’re an adult, it’s important to focus on your financial well-being and learn to manage your finances.</p>


<h2 id="h-8-participate-in-school-traditions" class="wp-block-heading"><strong>#8: Participate in School Traditions</strong></h2>
<p>UCLA has its traditional undie run, while Duke University has the bench-burning ceremony when the basketball team wins against UNC-Chapel Hill. Take part in your school’s timeless traditions to feel more connected with your college and the history it has.</p>


<h2 id="h-9-take-a-picture-with-your-school-mascot" class="wp-block-heading"><strong>#9: Take a Picture With Your School Mascot</strong></h2>
<p>A picture with your school mascot will definitely be one for the books. Whether it’s a mascot statue or the mascot in costume, it’s a classic experience to add to your bucket list.</p>


<h2 id="h-10-attend-a-random-lecture" class="wp-block-heading"><strong>#10: Attend a Random Lecture </strong></h2>
<p>When you have a free day, drop into a random lecture and learn something new. When you’re in an environment where learning is happening all around you, you can most definitely sit in on a random lecture without drawing any attention.</p>
<p>You may be surprised by what you learn.</p>


<h2 id="h-11-play-an-intramural-sport" class="wp-block-heading"><strong>#11: Play An Intramural Sport</strong></h2>
<p>The best part about intramural sports is that you don’t have to be good at them. Usually, anyone can sign up, as long as they have a team.</p>
<p>Participating in intramural sports is a great way to exercise, socialize, and have fun. Consider getting a group of friends (or strangers) to form an intramural team for a sport you enjoy.</p>


<h2 id="h-12-check-out-the-career-fair" class="wp-block-heading"><strong>#12: Check Out the Career Fair</strong></h2>
<p>While the idea of a career fair might sound cheesy, they’re an incredibly valuable opportunity to network with companies and hiring managers, which could help you land a job post-grad.</p>
<p>Career fairs are a great way to gain exposure to different companies and explore different employment opportunities. Remember to wear your best business attire and print out copies of your resume.</p>


<h2 id="h-13-venture-out-to-a-neighboring-city" class="wp-block-heading"><strong>#13: Venture Out to a Neighboring City</strong></h2>
<p>Take a little weekend trip to any neighboring cities around your college. Explore what makes the city unique, whether it’s an annual fair, a national monument, or a classic museum. If you’re balling on a budget, explore sites like <a href="https://www.groupon.com/">Groupon</a> and your local library for discounted tickets to events and experiences.</p>


<h2 id="h-14-go-to-a-tailgate" class="wp-block-heading"><strong>#14: Go To A Tailgate</strong></h2>
<p>Tailgates are pre-game celebrations that usually take place in a parking lot before different sports games. They usually have music, food, and drinks to ramp up the school spirit.</p>


<h2 id="h-15-get-published" class="wp-block-heading"><strong>#15: Get Published</strong></h2>
<p>Whether it’s photography, poetry, an op-ed, or a podcast, submit your work to an organization on campus and get published. Plenty of clubs are looking for artist pieces to publish – take advantage of these opportunities!</p>


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College is a special four years of your life, and you’ll want to make the most out of your experience. Here’s the ultimate college bucket list to make memories that will last you a lifetime.

<h2 id="h-8-participate-in-school-traditions" class="wp-block-heading"><strong>#8: Participate in School Traditions</strong></h2>
UCLA has its traditional undie run, while Duke University has the bench-burning ceremony when the basketball team wins against UNC-Chapel Hill. Take part in your school’s timeless traditions to feel more connected with your college and the history it has.

<h2 id="h-9-take-a-picture-with-your-school-mascot" class="wp-block-heading"><strong>#9: Take a Picture With Your School Mascot</strong></h2>
A picture with your school mascot will definitely be one for the books. Whether it’s a mascot statue or the mascot in costume, it’s a classic experience to add to your bucket list.

<h2 id="h-10-attend-a-random-lecture" class="wp-block-heading"><strong>#10: Attend a Random Lecture </strong></h2>
When you have a free day, drop into a random lecture and learn something new. When you’re in an environment where learning is happening all around you, you can most definitely sit in on a random lecture without drawing any attention.

You may be surprised by what you learn.

<h2 id="h-11-play-an-intramural-sport" class="wp-block-heading"><strong>#11: Play An Intramural Sport</strong></h2>
The best part about intramural sports is that you don’t have to be good at them. Usually, anyone can sign up, as long as they have a team.

Participating in intramural sports is a great way to exercise, socialize, and have fun. Consider getting a group of friends (or strangers) to form an intramural team for a sport you enjoy.

<h2 id="h-12-check-out-the-career-fair" class="wp-block-heading"><strong>#12: Check Out the Career Fair</strong></h2>
While the idea of a career fair might sound cheesy, they’re an incredibly valuable opportunity to network with companies and hiring managers, which could help you land a job post-grad.

Career fairs are a great way to gain exposure to different companies and explore different employment opportunities. Remember to wear your best business attire and print out copies of your resume.

<h2 id="h-13-venture-out-to-a-neighboring-city" class="wp-block-heading"><strong>#13: Venture Out to a Neighboring City</strong></h2>
Take a little weekend trip to any neighboring cities around your college. Explore what makes the city unique, whether it’s an annual fair, a national monument, or a classic museum. If you’re balling on a budget, explore sites like <a href="https://www.groupon.com/">Groupon</a> and your local library for discounted tickets to events and experiences.

<h2 id="h-14-go-to-a-tailgate" class="wp-block-heading"><strong>#14: Go To A Tailgate</strong></h2>
Tailgates are pre-game celebrations that usually take place in a parking lot before different sports games. They usually have music, food, and drinks to ramp up the school spirit.

<h2 id="h-15-get-published" class="wp-block-heading"><strong>#15: Get Published</strong></h2>
Whether it’s photography, poetry, an op-ed, or a podcast, submit your work to an organization on campus and get published. Plenty of clubs are looking for artist pieces to publish – take advantage of these opportunities!

<h2 id="h-1-study-abroad" class="wp-block-heading"><strong>#1: Study Abroad</strong></h2>
Studying abroad can be a once-in-a-lifetime experience. Not only do you get to study in another country with your friends, but you get the chance to immerse yourself in a new language, with new people, and a new culture.

It’s a great opportunity to escape your comfort zone and put yourself out there.

<h2 id="h-2-eat-at-every-local-restaurant-in-town" class="wp-block-heading"><strong>#2: Eat at Every Local Restaurant in Town</strong></h2>
Spend your four years in college getting to know the city you’re inhabiting.

While it is a hefty goal, aim to hit every food spot available, whether it’s an ice cream shop, an Indian restaurant, or a brewery. It’s a great way to get to know the food scene in your college town and can be a great bonding opportunity for friends.

<h2 id="h-3-go-on-a-road-trip-with-friends" class="wp-block-heading"><strong>#3: Go On A Road Trip With Friends</strong></h2>
Develop your lifelong friendships by going on a road trip. Whether you’re going on a short trip to the mountains or the beach, road-tripping is a great way to bring your friend group together, make memories, and explore the state you’re in.

<h2 id="h-4-make-the-dean-s-list" class="wp-block-heading"><strong>#4: Make the Dean’s List</strong></h2>
While the college experience might be all about making unforgettable memories and having fun, remember the reason that you’re there in the first place is to learn.

Making the dean’s list is a great way to challenge yourself academically and dedicate yourself to your studies. It’s an attainable goal if you put in the hard work, and the benefits of it are definitely worth it.

<h2 id="h-5-dye-your-hair-pierce-something-or-get-a-tattoo" class="wp-block-heading"><strong>#5: Dye Your Hair, Pierce Something, or Get a Tattoo</strong></h2>
College is one of the only periods in your life when you can make crazy decisions without being judged too harshly. Take the chance and do something crazy. Whether you dye your hair bright pink, pierce your ears, or get your first tattoo, it’ll be a look to remember.

If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking <b>Apply</b> below.

<h2 id="h-6-enjoy-your-student-discount" class="wp-block-heading"><strong>#6: Enjoy Your Student Discount</strong></h2>
Your .edu email can save you some money on your next <a href="https://www.asos.com/us/discover/students/asos-on-campus/student-validation/">ASOS</a> or <a href="https://www.drmartens.com/us/en/student-discount">Dr. Martens</a> purchase. Certain stores and online subscriptions give you a discount just based on the fact that you’re a student. Go save some money!

<h2 id="h-7-apply-for-your-first-credit-card" class="wp-block-heading"><strong>#7: Apply For Your First Credit Card</strong></h2>
Getting your first credit card is an important step to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">building a strong credit score</a> and history in college. Now that you’re an adult, it’s important to focus on your financial well-being and learn to manage your finances.

College is a special four years of your life, and you’ll want to make the most out of your experience. Here’s the ultimate college bucket list to make memories that will last you a lifetime.  #1: Study Abroad Studying abroad can be a once-in-a-lifetime experience. Not only do you get to study in another country &hellip; Continue reading "Bucket List for College: 15 Things to Do During University"

Bucket List for College: 15 Things to Do During University

Federal Student Loans

Federal Student Loans Archives

Federal Student Loans Archives - Sparrow Nest

Private Student Loans

Private Student Loans Archives

Private Student Loans Archives - Sparrow Nest

<p>There are two types of student loans: <strong>private</strong> and <strong>federal</strong>. While private student loans are provided by private entities such as banks and financial institutions, federal student loans are provided by the federal government. If you think you may need a student loan to pay for college, check your student loan eligibility ASAP.</p>


<h2 id="h-how-to-check-your-eligibility" class="wp-block-heading"><b><strong>How to Check Your Eligibility</strong></b></h2>
<ul>
<li class="wp-block-heading">Private Student Loans: Each private student lender has its own unique eligibility requirements. Therefore, the easiest way to check your <a style="font-family: sans-serif; font-size: medium; font-weight: normal;" href="http://sparrowfi.com">eligibility for multiple private student loans</a> at once is to use the <a style="font-family: sans-serif; font-size: medium; font-weight: normal;" href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>. Sparrow will show you the lenders you pre-qualify to borrow from and the exact interest rate you’d qualify for with each one.</li>
<li class="wp-block-heading">Federal Student Loans: To check your eligibility for federal student loans, you must <a href="https://studentaid.gov/h/apply-for-aid/fafsa">complete the FAFSA</a>.</li>
</ul>


<h2 class="wp-block-heading">Who is Eligible for a Student Loan?</h2>
<h3 id="h-private-student-loans" class="wp-block-heading"><b>Private Student Loan</b>s</h3>
<p>Private student loans are provided by a lender such as a bank, credit union, state agency, or a school. Each lender has different rates and eligibility requirements. However, in just two minutes, you can <a href="https://www.sparrowfi.com/">check your student loan rate and eligibility</a> with 17+ lenders by using the Sparrow form.</p>
<p>While each private student lender will have its own unique eligibility, there are a few that tend to be the same across the board:</p>
<ol>
<li><i><em><strong>Enroll in an eligible program:</strong></em></i> Private student loans can only be used for education costs. Therefore, you’ll need to enroll in an eligible academic program to be considered for private student loans.</li>
<li><i><strong>Be a U.S. citizen, permanent resident or eligible international student.</strong></i> Most private student lenders will require you to be a U.S. citizen or permanent resident with a Social Security number.</li>
</ol>
<p><em>If you are an international student, you’ll be eligible with many lenders if you have a cosigner who is a U.S. citizen or permanent resident. If not, </em><em><a href="https://www.mpowerfinancing.com/get-a-loan/?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a></em><em> and </em><em><a href="https://prodigyfinance.com/?utm_source=Sparrow-affiliate-000-000&amp;utm_medium=website&amp;utm_content=homepage&amp;utm_campaign=partners-Sparrow-affiliate-000-000">Prodigy</a></em><em> also provide student loans to international students without an SSN or credit history.</em></p>
<p></p>

<h3 id="h-federal-student-loans" class="wp-block-heading"><b>Federal Student Loans</b></h3>
<p>To qualify for federal student loans, you must:</p>
<ol>
<li>*<i><strong>Demonstrate financial need (for most programs).</strong></i> Whether or not you must prove financial need depends on the type of student loan. Specifically, to qualify for Federal <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Subsidized</a> Loans, you’ll need to show financial need. To receive <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Unsubsidized</a> or <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">PLUS Loans</a>, you do not need to demonstrate financial need.<em>*Your financial need is </em><em>c</em><em>alculated</em><em> bas</em><em>ed on the information you provide on the FAFSA.</em></li>
<li><i><strong>Be a U.S. citizen or *eligible noncitizen.</strong></i> In general, you must be a U.S. citizen or eligible noncitizen to qualify for federal student loans. However, in some cases, legal U.S. residents without citizenship may qualify.* <em>An eligible noncitizen is a U.S. national, U.S. permanent resident, or an individual holding an Arrival-Departure Record from U.S. Citizenship and Immigration Services under one of the following t</em>itles<em>:</em><br />
<em>Refugee<br />
Asylum Granted<br />
Cuban-Haitian Entrant<br />
Conditional Entrant (valid if issued before April 1, 1980)<br />
Victims of Human Trafficking (T-Visa -2, -3, or -4 holders)<br />
Parolee (with certain <a href="https://studentaid.gov/understand-aid/eligibility/requirements">conditions</a>)</em></li>
<li><i><strong>Have a Social Security number.</strong></i> In most cases, you need a social security number to be eligible. However, there are a few U.S. territories in which you would not need a Social Security number.</li>
<li><i><strong>Enroll in an </strong></i><em><i><strong>e</strong></i></em><strong><em>ligible </em></strong><i><strong>a</strong></i><strong><em>cademic</em></strong><i><strong> program</strong></i><strong>.</strong> Federal student loans can only be used for accredited or recognized, degree-granting programs. Therefore, if you aren’t attending one of these schools, you won’t be able to receive federal student loans.</li>
<li><i><strong>Have satisfactory academic progress.</strong></i> Each individual school will have its own academic requirements. Accordingly, if you do not meet those, you can be denied federal financial aid including federal student loans.</li>
<li><i><strong>Enroll at least half-time (for Federal Direct Loans only).</strong></i> For Federal Direct Loans, you must be enrolled at least half-time.</li>
<li><i><strong>Complete the FAFSA.</strong></i> The <a href="https://www.sparrowfi.com/blog/6-simple-steps-to-fill-out-fafsa">FAFSA</a> collects and processes your financial information to determine your eligibility for need-based aid. In order to qualify for any federal student loans, you must complete the FAFSA.</li>
<li><i><strong>Meet all qualifications for your specific program.</strong></i> To be considered a student at your respective school, you must meet their enrollment requirements. Generally, this may mean having a high school diploma or GED. You must meet all of your school’s requirements in order to be eligible for federal student aid.</li>
</ol>
<p></p>
<p></p>
<p><i>Note:</i> Selective Service registration is no longer required to qualify for federal student loans.</p>

<h2 id="h-how-is-student-loan-eligibility-determined" class="wp-block-heading"><b>How is Student Loan Eligibility Determined?</b></h2>
<p>Eligibility for private student loans depends on the lender. Each lender looks at your application against a different set of criteria. Check your <a href="http://sparrowfi.com">student loan eligibility across multiple lenders</a> at once. In general, here are the main factors that determine your eligibility:</p>
<ul>
<li><a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">Credit score</a> and credit history</li>
<li>Income and debt</li>
<li>Enrollment in qualified academic programs</li>
</ul>
<p>Eligibility for federal student loans will depend on whether you meet the <a href="https://www.sparrowfi.com/blog/ultimate-fafsa-guide">FAFSA criteria</a>. After filling out the FAFSA, your information will be used to determine if you qualify for federal student loans. Then, it will determine what type of loans you are eligible for and how much aid you are eligible for overall.</p>


<h2 id="h-what-disqualifies-you-from-getting-a-student-loan" class="wp-block-heading"><b>What Disqualifies You From Getting a Student Loan?</b></h2>
<p>Student loan applications can be denied for a variety of reasons. The most common reasons are not meeting the basic eligibility criteria for the respective loan. However, there are other ways you can be disqualified from obtaining a student loan.</p>
<h3><i><strong>Private Student Loans</strong></i></h3>
<p>Each private lender has their own unique requirements to qualify for a student loan. Lenders will look at a variety of factors to determine whether you are eligible to borrow from them. This includes, but is not limited to:</p>
<ol>
<li>Your employment history</li>
<li>Your credit score</li>
<li>Your debt-to-income ratio</li>
<li>Your enrollment status at a qualifying school</li>
</ol>
<p>If you do not meet the basic eligibility criteria within these categories, you may not qualify for a private student loan with that specific lender.</p>
<h3><i><strong>Federal Student Loans</strong></i></h3>
<p>If you do not complete the FAFSA, you will not be able to receive federal student loans.</p>
<p>Additionally, being convicted of certain crimes can also be cause for disqualification. Drug-related crimes, such as sale of illegal drugs or drug possession, can disqualify you from receiving federal aid in the future.</p>


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<h2 id="h-is-there-an-age-limit-for-a-student-loan" class="wp-block-heading"><b>Is There an Age Limit for a Student Loan?</b></h2>
<p>For many private student loans, you must be at least 18 years old to take out a loan. This number can vary from state to state.</p>
<p>For federal student loans, you must submit the FAFSA. In order to submit the FAFSA, you need an FSA ID. Applicants must be at least 13 years old to obtain an FSA ID. However, there is no upper age limit for federal student loans.</p>


<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><b>Final Thoughts from the Nest</b></h2>
<p>Federal and private student loans each have their own eligibility requirements. Before submitting the FAFSA or applying for a private student loan, make sure you meet the basic eligibility requirements.</p>
<p> </p>
<div class="wp-block-spacer" aria-hidden="true"></div>
<p> </p>
<p><em>Sparrow&#8217;s goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. Accordingly, this may influence which products </em></p>

There are two types of student loans: <strong>private</strong> and <strong>federal</strong>. While private student loans are provided by private entities such as banks and financial institutions, federal student loans are provided by the federal government. If you think you may need a student loan to pay for college, check your student loan eligibility ASAP.

<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><b>Final Thoughts from the Nest</b></h2>
Federal and private student loans each have their own eligibility requirements. Before submitting the FAFSA or applying for a private student loan, make sure you meet the basic eligibility requirements.

 
<div class="wp-block-spacer" aria-hidden="true"></div>
 

<em>Sparrow's goal is to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. Accordingly, this may influence which products </em>

<h2 id="h-how-to-check-your-eligibility" class="wp-block-heading"><b><strong>How to Check Your Eligibility</strong></b></h2>
<ul>
 	<li class="wp-block-heading">Private Student Loans: Each private student lender has its own unique eligibility requirements. Therefore, the easiest way to check your <a style="font-family: sans-serif; font-size: medium; font-weight: normal;" href="http://sparrowfi.com">eligibility for multiple private student loans</a> at once is to use the <a style="font-family: sans-serif; font-size: medium; font-weight: normal;" href="https://www.app.sparrowfi.com/login/type">Sparrow form</a>. Sparrow will show you the lenders you pre-qualify to borrow from and the exact interest rate you’d qualify for with each one.</li>
 	<li class="wp-block-heading">Federal Student Loans: To check your eligibility for federal student loans, you must <a href="https://studentaid.gov/h/apply-for-aid/fafsa">complete the FAFSA</a>.</li>
</ul>

<h2 class="wp-block-heading">Who is Eligible for a Student Loan?</h2>
<h3 id="h-private-student-loans" class="wp-block-heading"><b>Private Student Loan</b>s</h3>
Private student loans are provided by a lender such as a bank, credit union, state agency, or a school. Each lender has different rates and eligibility requirements. However, in just two minutes, you can <a href="https://www.sparrowfi.com/">check your student loan rate and eligibility</a> with 17+ lenders by using the Sparrow form.

While each private student lender will have its own unique eligibility, there are a few that tend to be the same across the board:
<ol>
 	<li><i><em><strong>Enroll in an eligible program:</strong></em></i> Private student loans can only be used for education costs. Therefore, you’ll need to enroll in an eligible academic program to be considered for private student loans.</li>
 	<li><i><strong>Be a U.S. citizen, permanent resident or eligible international student.</strong></i> Most private student lenders will require you to be a U.S. citizen or permanent resident with a Social Security number.</li>
</ol>
<em>If you are an international student, you’ll be eligible with many lenders if you have a cosigner who is a U.S. citizen or permanent resident. If not, </em><em><a href="https://www.mpowerfinancing.com/get-a-loan/?utm_source=sparrowfi&amp;utm_medium=link&amp;utm_term=website&amp;utm_content=lender-box&amp;sub_id=affiliate-000-000">MPOWER</a></em><em> and </em><em><a href="https://prodigyfinance.com/?utm_source=Sparrow-affiliate-000-000&amp;utm_medium=website&amp;utm_content=homepage&amp;utm_campaign=partners-Sparrow-affiliate-000-000">Prodigy</a></em><em> also provide student loans to international students without an SSN or credit history.</em>

<h3 id="h-federal-student-loans" class="wp-block-heading"><b>Federal Student Loans</b></h3>
To qualify for federal student loans, you must:
<ol>
 	<li>*<i><strong>Demonstrate financial need (for most programs).</strong></i> Whether or not you must prove financial need depends on the type of student loan. Specifically, to qualify for Federal <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Subsidized</a> Loans, you’ll need to show financial need. To receive <a href="https://www.sparrowfi.com/blog/the-difference-between-subsidized-and-unsubsidized-loans">Direct Unsubsidized</a> or <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">PLUS Loans</a>, you do not need to demonstrate financial need.<em>*Your financial need is </em><em>c</em><em>alculated</em><em> bas</em><em>ed on the information you provide on the FAFSA.</em></li>
 	<li><i><strong>Be a U.S. citizen or *eligible noncitizen.</strong></i> In general, you must be a U.S. citizen or eligible noncitizen to qualify for federal student loans. However, in some cases, legal U.S. residents without citizenship may qualify.* <em>An eligible noncitizen is a U.S. national, U.S. permanent resident, or an individual holding an Arrival-Departure Record from U.S. Citizenship and Immigration Services under one of the following t</em>itles<em>:</em>
<em>Refugee
Asylum Granted
Cuban-Haitian Entrant
Conditional Entrant (valid if issued before April 1, 1980)
Victims of Human Trafficking (T-Visa -2, -3, or -4 holders)
Parolee (with certain <a href="https://studentaid.gov/understand-aid/eligibility/requirements">conditions</a>)</em></li>
 	<li><i><strong>Have a Social Security number.</strong></i> In most cases, you need a social security number to be eligible. However, there are a few U.S. territories in which you would not need a Social Security number.</li>
 	<li><i><strong>Enroll in an </strong></i><em><i><strong>e</strong></i></em><strong><em>ligible </em></strong><i><strong>a</strong></i><strong><em>cademic</em></strong><i><strong> program</strong></i><strong>.</strong> Federal student loans can only be used for accredited or recognized, degree-granting programs. Therefore, if you aren’t attending one of these schools, you won’t be able to receive federal student loans.</li>
 	<li><i><strong>Have satisfactory academic progress.</strong></i> Each individual school will have its own academic requirements. Accordingly, if you do not meet those, you can be denied federal financial aid including federal student loans.</li>
 	<li><i><strong>Enroll at least half-time (for Federal Direct Loans only).</strong></i> For Federal Direct Loans, you must be enrolled at least half-time.</li>
 	<li><i><strong>Complete the FAFSA.</strong></i> The <a href="https://www.sparrowfi.com/blog/6-simple-steps-to-fill-out-fafsa">FAFSA</a> collects and processes your financial information to determine your eligibility for need-based aid. In order to qualify for any federal student loans, you must complete the FAFSA.</li>
 	<li><i><strong>Meet all qualifications for your specific program.</strong></i> To be considered a student at your respective school, you must meet their enrollment requirements. Generally, this may mean having a high school diploma or GED. You must meet all of your school’s requirements in order to be eligible for federal student aid.</li>
</ol>




<i>Note:</i> Selective Service registration is no longer required to qualify for federal student loans.

<h2 id="h-how-is-student-loan-eligibility-determined" class="wp-block-heading"><b>How is Student Loan Eligibility Determined?</b></h2>
Eligibility for private student loans depends on the lender. Each lender looks at your application against a different set of criteria. Check your <a href="http://sparrowfi.com">student loan eligibility across multiple lenders</a> at once. In general, here are the main factors that determine your eligibility:
<ul>
 	<li><a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">Credit score</a> and credit history</li>
 	<li>Income and debt</li>
 	<li>Enrollment in qualified academic programs</li>
</ul>
Eligibility for federal student loans will depend on whether you meet the <a href="https://www.sparrowfi.com/blog/ultimate-fafsa-guide">FAFSA criteria</a>. After filling out the FAFSA, your information will be used to determine if you qualify for federal student loans. Then, it will determine what type of loans you are eligible for and how much aid you are eligible for overall.

<h2 id="h-what-disqualifies-you-from-getting-a-student-loan" class="wp-block-heading"><b>What Disqualifies You From Getting a Student Loan?</b></h2>
Student loan applications can be denied for a variety of reasons. The most common reasons are not meeting the basic eligibility criteria for the respective loan. However, there are other ways you can be disqualified from obtaining a student loan.
<h3><i><strong>Private Student Loans</strong></i></h3>
Each private lender has their own unique requirements to qualify for a student loan. Lenders will look at a variety of factors to determine whether you are eligible to borrow from them. This includes, but is not limited to:
<ol>
 	<li>Your employment history</li>
 	<li>Your credit score</li>
 	<li>Your debt-to-income ratio</li>
 	<li>Your enrollment status at a qualifying school</li>
</ol>
If you do not meet the basic eligibility criteria within these categories, you may not qualify for a private student loan with that specific lender.
<h3><i><strong>Federal Student Loans</strong></i></h3>
If you do not complete the FAFSA, you will not be able to receive federal student loans.

Additionally, being convicted of certain crimes can also be cause for disqualification. Drug-related crimes, such as sale of illegal drugs or drug possession, can disqualify you from receiving federal aid in the future.

<h2 id="h-is-there-an-age-limit-for-a-student-loan" class="wp-block-heading"><b>Is There an Age Limit for a Student Loan?</b></h2>
For many private student loans, you must be at least 18 years old to take out a loan. This number can vary from state to state.

For federal student loans, you must submit the FAFSA. In order to submit the FAFSA, you need an FSA ID. Applicants must be at least 13 years old to obtain an FSA ID. However, there is no upper age limit for federal student loans.

Each private student lender has its own unique eligibility requirements. Here's how to check your student loan eligibility with 17+ lenders at once...

Student Loan Eligibility: Private and Federal Loans

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Grace Lemire

Repayment

Repayment Archives

Repayment Archives - Sparrow Nest

Student Loan Refinancing

Student Loan Refinancing Archives

Student Loan Refinancing Archives - Sparrow Nest

Sparrow partners with financial institutions to provide students and their families with a streamlined search and comparison process that helps borrowers find the best private student loan offers in minutes.&nbsp; We believe transparency is key to earning and maintaining borrowers’ trust. That’s why we take who we partner with seriously. The lenders that borrowers choose &hellip; Continue reading "How We Select the Lenders We Partner With"

How We Select the Lenders We Partner With

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Sparrow Team

Grants and Scholarships

Grants and Scholarships Archives

Grants and Scholarships Archives - Sparrow Nest

Feeling panicked about how to pay for school? Here's everything you need to know about how to pay for college.

How to Pay for College

An Annual Percentage Rate, or APR, is the interest rate applied on a student loan for the whole year. This number may differ from your interest rate because it takes into account any fees associated with your loan.

Student Loan Glossary | Complete List of Loan Vocabulary

<p>For the 2021-2022 academic year, the average interest rate for federal student loans was 3.73% for undergraduates, 5.28% for graduate students, and 6.28% for parents and graduate students taking out <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">PLUS loans</a>. While it’s challenging to determine the average for private student loans simply due to how much the interest rates vary, they tend to be even higher.</p>
<p>Finding ways to lower your student loan interest rate could lower your overall monthly payment and save you money over time. Here’s how to lower your student loan interest rate for both federal and private student loans.</p>


<h2 id="h-can-i-get-a-lower-interest-rate-on-my-federal-loans" class="wp-block-heading"><strong>Can I Get a Lower Interest Rate on My Federal Loans?</strong></h2>
<p>Interest rates on federal student loans are set by Congress each year and are technically considered law. Unfortunately, this means that borrowers of federal student loans can’t negotiate their way into a better interest rate.</p>
<p>However, you may be able to get a small reduction on your interest rate by opting into <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">automatic payments</a>. If you agree to make payments on your loan through autopay, a system that automatically takes the monthly payment amount straight from your bank account, you may be able to secure around a 0.25 to 0.50 percentage point reduction in your interest rate.</p>
<p>If you’re confident this method wouldn’t send you into a spiral of overdraft fees, it may be a good option to enroll in auto-debit payments to save you a bit of interest.</p>
<p><strong>Note: </strong>Be sure to check with your federal loan servicer to see if they offer <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">interest rate discounts</a> for setting up autopay.</p>


<h2 id="h-can-i-get-a-lower-interest-rate-on-my-private-loans" class="wp-block-heading"><strong>Can I Get a Lower Interest Rate on My Private Loans?</strong></h2>
<p>Interest rates on private loans are set by the lender themselves and based on a variety of factors such as your credit score and income. This means that the rates are not set in stone as with federal student loans. Private lenders may be open to negotiation or reevaluating your interest rate.</p>


<h2 id="h-proactive-steps-to-lower-your-private-loan-interest-rate" class="wp-block-heading"><strong>Proactive Steps to Lower Your Private Loan Interest Rate</strong></h2>
<p>If you’re thinking about taking out a private student loan, there are a few things you should do beforehand that will help you secure a lower interest rate when you apply:</p>
<p><strong> </strong></p>
<h3 id="h-take-a-look-at-your-credit-score" class="wp-block-heading"><em>Take a Look at Your Credit Score</em></h3>
<p>Interest rates are calculated based on a variety of factors, one of which being your credit score. Ensuring you have a solid credit score before applying for a private loan will help you get a lower interest rate.</p>
<p>Although each lender is different, in general, private lenders look for credit scores around 660 or above. While you can still get a private loan with a <a href="https://www.sparrowfi.com/blog/best-private-student-loans-for-bad-credit">bad credit score</a>, your interest rates will be higher. If your credit score isn’t great, don’t worry. There are things you can do to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">raise it</a>.</p>

<h3 id="h-find-someone-willing-to-cosign" class="wp-block-heading"><em>Find Someone Willing to Cosign</em></h3>
<p>A <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">cosigner</a> is someone who signs onto the loan alongside the borrower, agreeing to pay back the loan if the borrower doesn&#8217;t. Having a cosigner with a good credit score can help you secure a lower interest rate on your private loan because lenders will assume less risk. Given that most young people have a limited credit history, cosigners are very common for private student loans. In fact, around 90% of undergraduate students use a cosigner for their student loans.</p>
<p>The only “risk” to having someone cosign is that they are technically equally responsible for the loan, meaning that if you fail to make payments on the loan, it could hurt their credit score.</p>


<h3 id="h-compare-interest-rates-carefully" class="wp-block-heading"><em>Compare Interest Rates Carefully</em></h3>
<p>As always, before jumping into <em>any</em> private loan, it’s important to compare multiple private lenders to find the lowest rate. Complete <a href="https://www.sparrowfi.com/sign-up">Sparrow’s request</a> to compare real rates from more than 10 different lenders to make sure you’re getting the best rate possible.</p>


<h2 id="h-lowering-your-interest-rate-if-you-already-have-a-loan" class="wp-block-heading"><strong>Lowering Your Interest Rate If You Already Have a Loan</strong></h2>
<p>If you already have a private student loan, you can lower your interest rate by:</p>
<p> </p>
<h3 id="h-opting-into-automatic-payments" class="wp-block-heading"><em>Opting Into Automatic Payments</em></h3>
<p>As with federal loans, many private lenders also offer a discount for opting into an <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">autopay</a> system. While the rate may only drop by 0.25 to 0.5 percent, every bit makes a difference.</p>
<p>Even if you only saved $10 a month from this decrease in interest, that would be $1,200 over the course of a 10-year repayment.</p>

<h3 id="h-refinancing-your-student-loans" class="wp-block-heading"><em>Refinancing Your Student Loans</em></h3>
<p>If you have a stable income and plan to pay off your student debt quickly, you should consider refinancing for a lower interest rate.</p>
<p><a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-refinancing-your-student-loans">Refinancing</a> your loan is the process of taking out a new loan with a lower interest rate to pay off the loan you currently have. By doing this, you can reduce your payments and save on interest.</p>
<p>Borrowers can also choose to consolidate their federal student loans through a <a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Direct Consolidation Loan</a>. The new interest rate will be the average of the rates on the loans you are consolidating. However, you’ll want to consider some of the <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-refinancing-federal-student-loans">benefits</a> associated with federal student loans that you&#8217;d be giving up, such as <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">income-driven repayment</a>, the possibility of loan forgiveness, and other federal borrower protections.</p>


<h3 id="h-negotiate-with-the-lender" class="wp-block-heading"><em>Negotiate with the Lender</em></h3>
<p>This method won’t guarantee you any savings in interest, but it’s always worth a shot. Look around online for private lenders offering competitive interest rates and present it to the lender you’re already working with. The lender might be willing to make alterations to the rate you previously agreed upon in an effort to keep you as a customer.</p>


<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
<p>Finding a way to lower your student loan interest rate is one of the best ways to save yourself money in the long run. While not all methods will work for everyone, it’s likely that if you’re trying different approaches, you’ll find at least one that will work.</p>
<p>When you’re ready to <a href="https://www.sparrowfi.com/student-loan-info">begin the student loan process</a>, or if you’re looking to <a href="https://www.sparrowfi.com/student-loan-refi">refinance</a>, we’re here to help.</p>


For the 2021-2022 academic year, the average interest rate for federal student loans was 3.73% for undergraduates, 5.28% for graduate students, and 6.28% for parents and graduate students taking out <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">PLUS loans</a>. While it’s challenging to determine the average for private student loans simply due to how much the interest rates vary, they tend to be even higher.

Finding ways to lower your student loan interest rate could lower your overall monthly payment and save you money over time. Here’s how to lower your student loan interest rate for both federal and private student loans.

<h3 id="h-refinancing-your-student-loans" class="wp-block-heading"><em>Refinancing Your Student Loans</em></h3>
If you have a stable income and plan to pay off your student debt quickly, you should consider refinancing for a lower interest rate.

<a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-refinancing-your-student-loans">Refinancing</a> your loan is the process of taking out a new loan with a lower interest rate to pay off the loan you currently have. By doing this, you can reduce your payments and save on interest.

Borrowers can also choose to consolidate their federal student loans through a <a href="https://www.sparrowfi.com/blog/what-are-direct-consolidation-loans">Direct Consolidation Loan</a>. The new interest rate will be the average of the rates on the loans you are consolidating. However, you’ll want to consider some of the <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-refinancing-federal-student-loans">benefits</a> associated with federal student loans that you'd be giving up, such as <a href="https://www.sparrowfi.com/blog/pros-and-cons-of-an-income-driven-repayment-plan">income-driven repayment</a>, the possibility of loan forgiveness, and other federal borrower protections.

<h3 id="h-negotiate-with-the-lender" class="wp-block-heading"><em>Negotiate with the Lender</em></h3>
This method won’t guarantee you any savings in interest, but it’s always worth a shot. Look around online for private lenders offering competitive interest rates and present it to the lender you’re already working with. The lender might be willing to make alterations to the rate you previously agreed upon in an effort to keep you as a customer.

<h2 id="h-final-thoughts-from-the-nest" class="wp-block-heading"><strong>Final Thoughts from the Nest</strong></h2>
Finding a way to lower your student loan interest rate is one of the best ways to save yourself money in the long run. While not all methods will work for everyone, it’s likely that if you’re trying different approaches, you’ll find at least one that will work.

When you’re ready to <a href="https://www.sparrowfi.com/student-loan-info">begin the student loan process</a>, or if you’re looking to <a href="https://www.sparrowfi.com/student-loan-refi">refinance</a>, we’re here to help.

<h2 id="h-can-i-get-a-lower-interest-rate-on-my-federal-loans" class="wp-block-heading"><strong>Can I Get a Lower Interest Rate on My Federal Loans?</strong></h2>
Interest rates on federal student loans are set by Congress each year and are technically considered law. Unfortunately, this means that borrowers of federal student loans can’t negotiate their way into a better interest rate.

However, you may be able to get a small reduction on your interest rate by opting into <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">automatic payments</a>. If you agree to make payments on your loan through autopay, a system that automatically takes the monthly payment amount straight from your bank account, you may be able to secure around a 0.25 to 0.50 percentage point reduction in your interest rate.

If you’re confident this method wouldn’t send you into a spiral of overdraft fees, it may be a good option to enroll in auto-debit payments to save you a bit of interest.

<strong>Note: </strong>Be sure to check with your federal loan servicer to see if they offer <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">interest rate discounts</a> for setting up autopay.

<h2 id="h-can-i-get-a-lower-interest-rate-on-my-private-loans" class="wp-block-heading"><strong>Can I Get a Lower Interest Rate on My Private Loans?</strong></h2>
Interest rates on private loans are set by the lender themselves and based on a variety of factors such as your credit score and income. This means that the rates are not set in stone as with federal student loans. Private lenders may be open to negotiation or reevaluating your interest rate.

<h2 id="h-proactive-steps-to-lower-your-private-loan-interest-rate" class="wp-block-heading"><strong>Proactive Steps to Lower Your Private Loan Interest Rate</strong></h2>
If you’re thinking about taking out a private student loan, there are a few things you should do beforehand that will help you secure a lower interest rate when you apply:

<strong> </strong>
<h3 id="h-take-a-look-at-your-credit-score" class="wp-block-heading"><em>Take a Look at Your Credit Score</em></h3>
Interest rates are calculated based on a variety of factors, one of which being your credit score. Ensuring you have a solid credit score before applying for a private loan will help you get a lower interest rate.

Although each lender is different, in general, private lenders look for credit scores around 660 or above. While you can still get a private loan with a <a href="https://www.sparrowfi.com/blog/best-private-student-loans-for-bad-credit">bad credit score</a>, your interest rates will be higher. If your credit score isn’t great, don’t worry. There are things you can do to <a href="https://www.sparrowfi.com/blog/5-ways-to-improve-your-credit-score">raise it</a>.

<h3 id="h-find-someone-willing-to-cosign" class="wp-block-heading"><em>Find Someone Willing to Cosign</em></h3>
A <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">cosigner</a> is someone who signs onto the loan alongside the borrower, agreeing to pay back the loan if the borrower doesn't. Having a cosigner with a good credit score can help you secure a lower interest rate on your private loan because lenders will assume less risk. Given that most young people have a limited credit history, cosigners are very common for private student loans. In fact, around 90% of undergraduate students use a cosigner for their student loans.

The only “risk” to having someone cosign is that they are technically equally responsible for the loan, meaning that if you fail to make payments on the loan, it could hurt their credit score.

<h3 id="h-compare-interest-rates-carefully" class="wp-block-heading"><em>Compare Interest Rates Carefully</em></h3>
As always, before jumping into <em>any</em> private loan, it’s important to compare multiple private lenders to find the lowest rate. Complete <a href="https://www.sparrowfi.com/sign-up">Sparrow’s request</a> to compare real rates from more than 10 different lenders to make sure you’re getting the best rate possible.

<h2 id="h-lowering-your-interest-rate-if-you-already-have-a-loan" class="wp-block-heading"><strong>Lowering Your Interest Rate If You Already Have a Loan</strong></h2>
If you already have a private student loan, you can lower your interest rate by:

 
<h3 id="h-opting-into-automatic-payments" class="wp-block-heading"><em>Opting Into Automatic Payments</em></h3>
As with federal loans, many private lenders also offer a discount for opting into an <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">autopay</a> system. While the rate may only drop by 0.25 to 0.5 percent, every bit makes a difference.

Even if you only saved $10 a month from this decrease in interest, that would be $1,200 over the course of a 10-year repayment.

The good news is that some interest rates are negotiable AND we’re about to give you everything you need to know to finesse a good one.

How to Get Lower Interest Rates on Student Loans

Refinancing is actually surprisingly easy to understand: a lender will pay off your existing loans and give you a new one with a lower interest rate or shorter repayment plan. Typically, you can refinance both your federal and private student loans.

The Ultimate Guide to Refinancing Your Student Loans

<p>It is no secret that the cost of education has increased dramatically over the last several decades. At the current rate, the cost of college doubles every nine years. The rapid increase in the cost of education has forced generations of Americans to rely on student loans to afford a degree. Unsurprisingly, almost <a href="https://studentloanhero.com/student-loan-debt-statistics/">70% of students</a> in the Class of 2019 took out student loans.</p>
<p>Since borrowing affects most students in the US, it is important to know how the student lending industry operates. In this article, we’ll break down everything you need to know about student loans.</p>


<h2 id="0-what-is-a-student-loan-" class="wp-block-heading"><strong>What is a Student Loan?</strong></h2>
<p>A student loan is money borrowed from the government or a private lender, designated for educational purposes. Typically, these loans cover the cost of tuition, books, supplies, and room-and-board.</p>


<h2 id="1-why-borrow-a-student-loan-" class="wp-block-heading"><strong>Why Borrow a Student Loan?</strong></h2>
<p>You should only take out student loans after you&#8217;ve exhausted <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">grants, work-study, and scholarships</a>.</p>
<p>While it is best to avoid debt, many financial professionals classify student loans as “good debt.&#8221; That&#8217;s because a college education is seen as an investment in yourself that helps increase your lifetime earning potential. In other words, the career earnings unlocked by a college degree are worth more than the loan. On average, college graduates earn more money and have better job security across their professional careers than those with only a high school diploma.</p>


<h2 id="2-types-of-student-loans-" class="wp-block-heading"><strong>Types of Student Loans</strong></h2>
<p>There are three main types of student loans:</p>
<ol>
<li><strong><a href="#federal_loans" data-type="internal" data-id="#federal_loans">Federal Student Loans</a></strong></li>
<li><a href="#private_student_loans" data-type="internal" data-id="#private_student_loans"><strong>Private Student Loans</strong></a></li>
<li><a href="#refinance_loans" data-type="internal" data-id="#refinance_loans"><strong>Student Loan</strong> <strong>Refinancing</strong></a></li>
</ol>
<p>Federal student loans are provided by the U.S. Department of Education, while private student loans and student loan refinancing are supported by banks, credit unions, non-profits, and other private lenders.</p>
<p id="federal_loans">Of the three types of debt, federal loans usually have the lowest interest rates and most flexible repayment options. With that said, the particular loan that is best for you depends on your financial need, year in school, and credit history.</p>

<h2 id="3-federal-student-loans-" class="wp-block-heading"><strong>Federal Student Loans</strong></h2>
<p>After you&#8217;ve exhausted grants, work-study, and scholarships, you should turn to federal student loans to pay for college.</p>
<p>In this section, we&#8217;ll break down:</p>
<ul>
<li><strong><a href="#how_to_apply">How to apply for federal student loans</a></strong></li>
<li><strong><a href="#benefits_of_federal_student_loans" data-type="internal" data-id="#benefits_of_federal_student_loans">Benefits of federal student loans</a></strong></li>
<li><strong><a href="#types_of_federal_student_loans">Types of federal student loans</a></strong></li>
<li><a href="#federal_student_loan_interest_rates"><strong>Federal student loan interest rates</strong></a></li>
<li><a href="#federal_student_loan_repayment_plans"><strong>Federal student loan repayment plans</strong></a></li>
</ul>


<h2 id="4-how-to-apply-for-federal-student-loans" class="wp-block-heading">How to Apply for Federal Student Loans</h2>
<p>To apply for federal student loans, you must fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is the go-to form that determines your eligibility for federal financial aid.</p>
<p>To receive federal support, you must be a U.S. citizen, have a valid social security number, have earned a high school diploma, and be enrolled at an eligible college or university.</p>
<p>The FAFSA is available starting Oct. 1 the year before a you plans to enroll. For example, if you are enrolling for the 2022-23 school year, the FAFSA will be available on Oct. 1, 2021.</p>
<p id="benefits_of_federal_student_loans">The FAFSA is accepted, reviewed, and distributed on a rolling basis. You should complete the <a href="https://studentaid.gov/h/apply-for-aid/fafsa">FAFSA form</a> as early as possible. The earlier you apply, the better your chances are for receiving financial aid awards.</p>


<h2 id="5-benefits-of-federal-student-loans" class="wp-block-heading">Benefits of Federal Student Loans</h2>
<p>Federal student loans come with many benefits and protections that are not typically offered with private student loans. Designed to reduce the burden of repayment, these advantages include:</p>
<ol>
<li><strong><a href="#lower_rates" data-type="internal" data-id="#lower_rates">Lower rates</a></strong></li>
<li><strong><a href="#no_credit_check">No credit check </a></strong></li>
<li><strong><a href="#no_cosigner_requirement">No cosigner requirement</a></strong></li>
<li><strong><a href="#forbearance_deferment_options">Forbearance and deferment options</a></strong></li>
<li><strong><a href="#income_driven_repayments">Income-driven repayments</a></strong></li>
<li><strong><a href="#loan_forgiveness" data-type="internal" data-id="#loan_forgiveness">Loan forgiveness</a></strong></li>
</ol>


<h3 id="6-1-lower-rates" class="wp-block-heading">1. Lower rates</h3>
<p>Federal student loans typically have lower interest rates than private loans. Rates for new federal loans are also fixed, meaning they’ll stay constant during the entire loan term.</p>
<h3 id="7-2-no-credit-check" class="wp-block-heading">2. No credit check</h3>
<p id="no_cosigner_requirement">Unlike private student loans, most federal loans do not require you to have credit history. The only type of federal loan that requires a credit check is <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">Direct PLUS</a>, which is available to graduate students and parents. This makes federal student loans the best option if you have a limited credit history.</p>
<h3 id="8-3-no-cosigner-requirement" class="wp-block-heading">3. No cosigner requirement</h3>
<p>Federal student loans do not require <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">cosigners</a>. This means you do not need to rely on a relative for financial help, making the process much easier for those legally and financially independent.</p>
<p>There is one exception: if you are a graduate student or parent applying for a Direct PLUS loan and have a poor credit history, you may not be eligible without an “endorser,” which is similar to a cosigner.</p>
<h3 id="9-4-forbearance-and-deferment-options-" class="wp-block-heading">4. Forbearance and deferment options</h3>
<p>Federal student loans offer <a href="https://www.sparrowfi.com/blog/forbearance-vs-deferment-vs-forgiveness">forbearance and deferment</a> options if you face economic hardship. Forbearance and deferment allow you to postpone your student loan payments for up to three years.</p>
<h3 id="10-5-income-driven-repayment" class="wp-block-heading">5. Income-driven repayment</h3>
<p>Federal student loans offer a repayment plan that is based on your income. With income-driven repayment, you pay a percentage of your income each month — or $0 if you have no income.</p>
<h3 id="11-6-loan-forgiveness" class="wp-block-heading">6. Loan forgiveness</h3>
<p>The <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a> program allows you to have loans forgiven after at least 10 years of public service and 120 qualifying monthly payments.</p>
<p id="types_of_federal_student_loans">Loan forgiveness is also available after you have made qualifying monthly payments in an income-driven repayment plan for 20 to 25 years.</p>


<h2 id="12-types-of-federal-student-loans-" class="wp-block-heading">Types of Federal Student Loans</h2>
<p>There are three types of federal student loans:</p>
<ol>
<li><strong><a href="#direct_subsidized_loans" data-type="internal" data-id="#direct_subsidized_loans">Direct Subsidized Loans</a></strong></li>
<li><a href="#direct_unsubsidized_loans"><strong>Direct Unsubsidized Loans</strong></a></li>
<li><strong><a href="#direct_plus_loans" data-type="internal" data-id="#direct_plus_loans">Direct PLUS Loans</a></strong></li>
</ol>
<p>We’ll break down what you need to know about each of the loans below.</p>
<p> </p>
<h3 id="13-direct-subsidized-loans-" class="wp-block-heading">Direct Subsidized Loans</h3>
<p> </p>
<h3 id="14-who-can-get-direct-subsidized-loans" class="wp-block-heading">Who can get Direct Subsidized loans?</h3>
<p> </p>
<p>In order to qualify for Direct Subsidized loans, you must be an eligible undergraduate student who demonstrates financial need.</p>

<h3 id="22-how-much-can-you-borrow" class="wp-block-heading">How much can you borrow?</h3>
<p>Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.</p>
<p>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.</p>


<h3 id="23-whats-the-interest-rate-on-direct-unsubsidized-loans-" class="wp-block-heading">What&#8217;s the interest rate on Direct Unsubsidized loans?</h3>
<p>The interest rate for Direct Unsubsidized loans is 5.28% for 2021-22.</p>


<h3 id="24-is-there-an-origination-fee" class="wp-block-heading">Is there an origination fee?</h3>
<p> </p>
<p>Similar to Subsidized loans, when you take out a Direct Unsubsidized loan, you will be charged an origination fee &#8212; a fee meant to offset a lender’s cost for issuing a loan. The origination fee is deducted from the loan disbursement before you or the school receives the funds. Currently, the origination fee on Direct Unsubsidized loans is 1.057%, but it changes each year on October 1st.</p>
<p>So for example, if you borrow $20,000 in Direct Unsubsidized loan, 1.057% (or $211) will go to the federal government, while the remaining $19,789 will go to your school (and then you).</p>

<h3 id="25-who-will-pay-the-interest-" class="wp-block-heading">Who will pay the interest?</h3>
<p> </p>
<p>When you take out a Direct Unsubsidized loan, you have a 6 month grace period. Unlike with Direct Subsidized loans, however, you are responsible for all interest charges on unsubsidized loans, from the moment you take out the loan until the day you pay it off.</p>

<h3 id="26-thoughts-from-the-sparrow-nest" class="wp-block-heading">Thoughts from the Sparrow Nest</h3>
<p> </p>
<p id="direct_unsubsidized_loans">Direct Unsubsidized loans are a great choice for undergraduate who have exhausted their Direct Subsidized loans. They&#8217;re also the preferred option for graduate and professional degree students who need federal funding. That is because of the relatively low interest rate and higher borrowing limits.</p>
<p>With that said, if you meet the financial need requirements to qualify for subsidized loans, you’ll pay less over time than you would with unsubsidized loans. Unlike with Direct Subsidized loans, you are responsible for all interest charges on Unsubsidized loans, from the moment you take out the loan until the day you pay it off.</p>

<h2>Direct Subsidized Loans vs Direct Unsubsidized Loans</h2>


<h2 id="direct-plus-loans" class="wp-block-heading">Direct PLUS Loans</h2>
<h3 id="29-what-are-the-different-types-of-direct-plus-loans" class="wp-block-heading">What are the different types of Direct PLUS loans?</h3>
<p>There are two types of Direct PLUS loans: <strong>Grad PLUS loans</strong> and <strong>Parent PLUS loans.</strong></p>
<p><strong>Grad PLUS loans</strong> allow graduate and professional students to borrow money to pay for their own education. You can use <a href="https://www.sparrowfi.com/blog/everything-you-need-to-know-about-grad-plus-loans">Grad PLUS loans</a> to cover any costs not already covered by other financial aid or grants, up to the full cost of attendance.</p>
<p><strong>Parent PLUS loans</strong> allow parents of dependent students to borrow money to cover any costs not already covered by the student’s financial aid package, up to the full cost of attendance. The program does not set a cumulative limit to how much parents may borrow. <a href="https://www.sparrowfi.com/blog/everything-you-need-to-know-about-parent-plus-loans">Parent PLUS loans</a> are the financial responsibility of the parents, not the student.</p>


<h3 id="30-who-can-get-direct-plus-loans" class="wp-block-heading">Who can get Direct PLUS loans?</h3>
<p>While most federal student loans are need or merit-based, Direct PLUS loans are based on a credit check. If you have a poor credit history, you will have a harder time qualifying and might require an “endorser” (essentially a cosigner, who pledges to pay back the loan if the primary borrower cannot). Even if you have an adverse credit history, you may still be able to receive a PLUS loan if you meet <a href="https://studentaid.gov/understand-aid/types/loans/plus">additional requirements</a>.</p>


<h3 id="31-how-much-can-you-borrow" class="wp-block-heading">How much can you borrow?</h3>
<p>The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received.</p>


<h3 id="32-whats-the-interest-rate-on-direct-plus-loans-" class="wp-block-heading">What’s the interest rate on Direct PLUS loans?</h3>
<p>The interest rate for Direct PLUS loans is 6.28% for 2021-22.</p>
<h3 id="33-is-there-an-origination-fee" class="wp-block-heading">Is there an origination fee?</h3>
<p>Similar to Subsidized and Unsubsidized loans, when you take out a Direct PLUS Loan, you will be charged an origination fee — a fee meant to offset a lender’s cost for issuing a loan. The origination fee is deducted from the loan disbursement before you or the school receives the funds. Currently, the origination fee on Direct PLUS Loans is 4.228%, but it changes each year on October 1st.</p>
<p>So for example, if you borrow $12,500 in Direct PLUS Loan, 4.228% (or $528) will go to the federal government, while the remaining $11,971 will go to your school (and then you).</p>


<h3 id="34-who-will-pay-the-interest-" class="wp-block-heading">Who will pay the interest?</h3>
<p>Direct PLUS loans are not subsidized, which means that interest accrues while you are enrolled in school. Direct PLUS loans also do not have a “grace period,” which means you must start repaying PLUS loans as soon as you or the school receives the loan funds.</p>


<h3 id="35-thoughts-from-the-sparrow-nest" class="wp-block-heading">Thoughts from the Sparrow Nest</h3>
<p>Direct PLUS loans can be a good option for parents and grad students, alike.</p>
<p>If you’re a parent, you should take out PLUS loans if you need the safety net or want the benefits these loans offer, such as income-driven repayment plans and Public Service Loan Forgiveness.</p>
<p id="federal_student_loan_interest_rates">If you’re a student, you should take out PLUS loans to pay for grad school only after you have maxed out the borrowing limit on lower-interest unsubsidized loans.</p>


<h2 id="federal-student-loan-interest-rates" class="has-text-align-center wp-block-heading">Federal Student Loan Interest Rates</h2>


<figure class="wp-block-table is-style-stripes"><figcaption>Note: The interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and PLUS loans first disbursed on or after July 1, 2021 and before July 1, 2022. Rates and fees are subject to change.</figcaption></figure>
<h2 id="federal-student-loan-repayment-plans" class="wp-block-heading">Federal Student Loan Repayment Plans</h2>
<p>Federal student loans offer several repayment options depending on the loan type. These options include:</p>
<ol>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#standard_repayment" data-type="internal" data-id="#standard_repayment">Standard Repayment</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#graduate_repayment">Graduated Repayment</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#extended_repayment" data-type="internal" data-id="#extended_repayment">Extended Repayment</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#income_driven_repayment" data-type="internal" data-id="#income_driven_repayment">Income-Driven Repayment</a></strong></li>
</ol>
<p id="standard_repayment">Check out the information below for a complete breakdown of the different repayment options for federal student loans.</p>


<h3 id="38-standard-payment-" class="wp-block-heading">Standard Payment</h3>
<p>The standard payment plan is available to all borrowers and is great if you want to pay off your debt in the shortest period of time. With a standard student loan payment option, you would make equal monthly payments for 10 years. You’ll pay less interest and pay off your loans faster than you would on other plans.</p>
<h4 id="39-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
<li>All borrowers are eligible for this plan.</li>
</ul>
<h4 id="40-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
<li>Direct Subsidized and Unsubsidized Loans</li>
<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
<li>All PLUS loans</li>
<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>


<h3 id="43-graduated-repayment-" class="wp-block-heading">Graduated Repayment</h3>
<p>The graduated repayment plan allow you to start your payments off at a lower amount and gradually increase to the full payment over a 10-year period. This plan is ideal if you plan to start your career at a lower income level or do not plan to dive into full-time work immediately after graduation.</p>
<h4 id="44-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
<li>All borrowers are eligible for this plan.</li>
</ul>
<h4 id="45-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
<li>Direct Subsidized and Unsubsidized Loans</li>
<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
<li>All PLUS loans</li>
<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>


<h3 id="48-extended-repayment-" class="wp-block-heading">Extended Repayment</h3>
<p>The extended repayment plan is available to all borrowers except those with Federal Direct Loans or Federal Family Education Loans (FFEL) that owe less than $30,000. This option allows for either a fixed or graduated payment, leading to full repayment by the end of a 25 year period.</p>
<p>This option is ideal if you have a hefty total loan amount and need a smaller monthly payment.</p>
<h4 id="49-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
<li>If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.</li>
</ul>
<h4 id="50-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
<li>Direct Subsidized and Unsubsidized Loans</li>
<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
<li>All PLUS loans</li>
<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>


<h3 id="53-income-driven-repayment-" class="wp-block-heading">Income-Driven Repayment</h3>
<p>Income-driven repayment plans use your income to set a monthly payment. This amount is typically 10-20% of your income and can be as low as $0 if you’re unemployed. With these plans, your loan term is extended, usually to around 12-25 years. When this term is up, the remaining balance you owe will sometimes be forgiven. However, you would be required to pay taxes on the forgiven amount, so you are not totally off the hook.</p>
<p>There are 5 different income-driven repayment options offered for federal student loans. Each of the income-driven repayment options has its own specific requirements in order to qualify, but they’re all ideal for people whose monthly income is too low to pay the standard monthly payment.</p>
<ol>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#PAYE" data-type="internal" data-id="#PAYE"><strong>Pay As You Earn Repayment Plan (PAYE)</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#REPAYE"><strong>Revised Pay As You Earn Repayment Plan (REPAYE)</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#IBR"><strong>Income-Based Repayment Plan (IBR)</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#ICR"><strong>Income-Contingent Repayment Plan (ICR)</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#ISR"><strong>Income-Sensitive Repayment (ISR)</strong></a></li>
</ol>


<h4 id="54-1-pay-as-you-earn-repayment-plan-paye" class="wp-block-heading">1. Pay As You Earn Repayment Plan (PAYE)</h4>
<p>The PAYE plan makes your monthly payment 10% of your discretionary income. The payments are reevaluated every year and updated if your income changes for any reason or if your family size changes. If you have not repaid your loan in full after 20 years, the remaining balance will be forgiven.</p>
<h4 id="55-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
<li>If you are a new borrower from either on or after October 1, 2007 and received a Direct Loan disbursement on or after October 1, 2011</li>
</ul>
<h4 id="56-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
<li>Direct Subsidized and Unsubsidized</li>
<li>Direct PLUS loans for students</li>
<li>Direct Consolidated Loans not including PLUS loans made to parents</li>
</ul>


<h4 id="57-2-revised-pay-as-you-earn-repayment-plan-repaye" class="wp-block-heading">2. Revised Pay As You Earn Repayment Plan (REPAYE)</h4>
<p>The REPAYE plan makes your monthly payments 10% of your discretionary income and is recalculated every year in the same way the PAYE plan is. For undergraduate loans, your remaining balance will be forgiven after 20 years, and for graduate loans, 25 years.</p>
<h4 id="58-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
<li>Any Direct Loan borrowers with an eligible loan type</li>
</ul>
<h4 id="59-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
<li>Direct Subsidized and Unsubsidized</li>
<li>Direct PLUS loans for students</li>
<li>Direct Consolidated Loans not including PLUS loans made to parents</li>
</ul>


<h4 id="60-3-income-based-repayment-plan-ibr" class="wp-block-heading">3. Income-Based Repayment Plan (IBR)</h4>
<p>An IBR plan sets monthly payments at either 10 or 15 percent of your discretionary income, neither amounting to more than what you would pay under the 10-year standard repayment plan. Payments are reevaluated every year based on changes in income and family size. Depending on when you received your first loan, your remaining balance will be forgiven after either 20 or 25 years. It is important to note that you may have to pay taxes on this forgiven amount.</p>
<h4 id="61-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
<li>Those with high debt relative to their income</li>
</ul>
<h4 id="62-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
<li>Direct Subsidized and Unsubsidized</li>
<li>Subsidized and Unsubsidized Stafford Loans</li>
<li>All PLUS loans for students</li>
<li>Consolidation Loans not including PLUS loans made to parents</li>
</ul>


<h4 id="63-4-income-contingent-repayment-plan-icr" class="wp-block-heading">4. Income-Contingent Repayment Plan (ICR)</h4>
<p>The ICR plan sets monthly payments at whichever is lesser: 20% of discretionary income OR the monthly payment you’d have on a plan with a fixed payment over 12 years, adjusted to your income. Payments are reevaluated and updated based on changes in your income and family size. Outstanding balances are forgiven after 25 years.</p>
<h4 id="64-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
<li>Any Direct Loan borrower with an eligible loan type</li>
</ul>
<h4 id="65-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
<li>Direct Subsidized and Unsubsidized</li>
<li>Direct PLUS loans for students</li>
<li>Direct Consolidation Loans</li>
</ul>


<h4 id="66-5-income-sensitive-repayment-isr" class="wp-block-heading">5. Income-Sensitive Repayment (ISR)</h4>
<p>The ISR plan sets monthly payments based on your annual income with the caveat that the loan is paid in full within 15 years.</p>
<h4 id="67-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
<li>Only for FFELP Program loans</li>
</ul>
<h4 id="68-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
<li>Subsidized and Unsubsidized Stafford Loans</li>
<li>FFELP PLUS Loans</li>
<li>FFELP Consolidation Loans</li>
</ul>


<h3 id="69-pros-and-cons-of-income-driven-repayment" class="has-text-align-center wp-block-heading">Pros and Cons of Income-Driven Repayment</h3>


<h2 id="private-student-loans" class="wp-block-heading"><strong>Private Student Loans</strong></h2>
<p>Private student loans can help you pay for college after you’ve exhausted scholarships, grants, and federal loans.</p>
<p>In this section, we’ll break down:</p>
<ul>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#who-makes-private-student-loans">Who makes private student loans</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#who-can-get-a-private-student-loan">Who can get a private student loan</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#How-much-you-can-borrow">How much you can borrow</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#How-interest-rates-are-determined">How interest rates are determined</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#What-is-a-co-signer">What is a cosigner</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#Private-student-loan-repayment-plans">Private student loan repayment plans</a></strong></li>
<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#Discounts-and-fees">Discounts and fees</a></strong></li>
</ul>


<h2 id="who-makes-private-student-loans" class="wp-block-heading">Who Makes Private Student Loans?</h2>
<p id="who-can-get-a-private-student-loan">Private loans are made by private lenders such banks, credit unions, non-profits, and online lenders, and have terms and conditions that are set by the lender. Private student loans typically have higher interest rates and less flexible repayment options compared to federal student loans.</p>


<h2 id="who-can-get-a-private-student-loan" class="wp-block-heading">Who Can Get a Private Student Loan?</h2>
<p>To qualify for a private student loan, you’ll need to attend an eligible school, as well as meet any age, education, or citizenship requirements. You’ll also need to meet a lender’s criteria for credit and income, or apply with a cosigner who does.</p>
<p id="How-much-you-can-borrow">While most private student loans are credit-based, there are a handful of private student loans that are future-income-based. These are great for students who cannot meet the credit requirements and do not have access to a qualified cosigner.</p>


<h2 id="how-much-can-you-borrow" class="wp-block-heading">How Much Can You Borrow?</h2>
<p id="How-interest-rates-are-determined">Private student loans have a higher borrowing limit compared to federal loans. Private lenders allow you to borrow up to your school’s cost of attendance. With that said, it is wise to only borrow what you need — and what you can afford to repay.</p>


<h2 id="how-are-interest-rates-determined" class="wp-block-heading">How are Interest Rates Determined?</h2>
<p>The interest rate on your private student loan depends on a few main factors:</p>
<ol id="credit_score">
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#credit_score"><strong>Credit score</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#type_of_interest_rate"><strong>Type of interest rate (fixed vs. variable)</strong></a></li>
<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#term_of_the_loan"><strong>Term of the loan</strong></a></li>
</ol>
<h3 id="75-credit-score" class="wp-block-heading">Credit score</h3>
<p>Most private student loans are credit-based. That means the lender looks at your history of borrowing money and paying it back on time. They want to know how creditworthy, or how responsible you are with credit, before approving your student loan application.</p>
<p id="type_of_interest_rate">In general, a <a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">higher credit score</a> leads to a lower interest rate. The reverse is also true — a lower credit score leads to a higher interest rate.</p>


<h3 id="76-type-of-interest-rate-fixed-vs-variable-" class="wp-block-heading">Type of interest rate (fixed vs variable)</h3>
<p>Most private lenders allow you to choose between a <a href="https://www.sparrowfi.com/blog/which-is-better-variable-vs-fixed-interest-rate-student-loans">fixed and variable</a> interest rate.</p>
<p>A fixed interest rate stays the same for the life of the loan. This means you’ll have a predictable student loan payment each month.</p>
<p>A variable interest rate fluctuates throughout the life of the loan depending on economic conditions. Variable interest rates often start out lower than fixed rates but can change, so your monthly student loan payments may vary considerably from month to month.</p>
<p id="term_of_the_loan">In general, fixed student loan interest rates are a better option than variable rates. That is because fixed rates always stay the same, so you will know exactly how much you need to pay each month. If you’re unsure which rate to choose, go with fixed; it is the safer option and allows you to budget accordingly. If you’re comfortable taking a risk to potentially save on interest, consider a variable rate.</p>


<h3 id="77-loan-term" class="wp-block-heading">Loan term</h3>
<p>Loan term, also called loan duration, is the length of time you’ll have to pay off your loan. Private student loan terms usually range between 5-20 years, with plenty of options in between. Keep in mind that the longer your loan term, the more time interest accrues — this leads to higher total cost.</p>
<p>A simple way to think about is:</p>
<p>The shorter the loan term, the higher the monthly payments. If you’re making high monthly payments, the faster the loan will be paid off and the lower the total cost, since interest has less time to accrue.</p>
<p id="What-is-a-co-signer">On the other hand, the longer the loan term, the lower the monthly payments.If you’re making low monthly payments, the slower the loan will be paid off and the higher the total cost, since interest has more time to accrue.</p>


<h2 id="what-is-a-cosigner" class="wp-block-heading">What is a Cosigner?</h2>
<p id="Private-student-loan-repayment-plans">If you cannot qualify for a student loan on your own, most private lenders will encourage you to apply with a cosigner. A cosigner is a person – such as a parent, close family member, or friend – who pledges to pay back the loan if you do not. This can be a benefit both to you and your lender since many many college-bound high school students have not had time to build up their own credit. However, it is risky to be the cosigner because if the student is unable to pay the loan back, the cosigner is responsible to pay on their behalf.</p>


<h2 id="private-student-loan-repayment-plans" class="has-text-align-center wp-block-heading">Private Student Loan Repayment Plans</h2>
<p>While repayment options depend on the lender, most private lenders offer some variation of the repayment plans below.</p>


<h2 id="are-there-any-discounts-or-fees-on-private-student-loans" class="wp-block-heading">Are there any discounts or fees on private student loans?</h2>
<h3 id="81-auto-pay-discount" class="wp-block-heading">Auto-pay discount</h3>
<p>Many lenders allow you to get an <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">interest rate reduction</a> by signing up for automatic payments. The autopay discount generally starts at 0.25% but can go up to 2%, depending on the lender.</p>
<h3 id="82-origination-fee" class="wp-block-heading">Origination fee</h3>
<p>An origination fee is a you must pay to offset a lender’s cost for issuing a loan. Private loans rarely have an origination fee, but all federal loans do (although at different rates: 1.057% for federal subsidized and unsubsidized and 4.228% for Federal PLUS).</p>
<h3 id="83-prepayment-penalty" class="wp-block-heading">Prepayment penalty</h3>
<p>A prepayment penalty is a fee you would have to pay if you want to repay your loans early. It is not allowed on any student loans, federal or private.</p>
<h3 id="84-application-fee" class="wp-block-heading">Application fee</h3>
<p>There is generally no cost to apply for private student loans.</p>


<h2 id="student-loan-refinance" class="wp-block-heading"><strong>Student Loan Refinance</strong></h2>


Compare rates from up to 17 lenders in as little as 2 minutes

Easily refinance your student loans

<h2 id="what-is-student-loan-refinancing" class="wp-block-heading">What is Student Loan Refinancing?</h2>
<p><a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-refinancing-your-student-loans">Student loan refinancing</a> is when a lender pays off your existing loans and gives you a new one with a lower interest rate or repayment plan. In the long run, this saves you money since you’ll be paying less interest.</p>
<p>Refinancing could look like this [<em>note: this is a very basic example</em>]:</p>
<p><strong>Loan 1:</strong> $10,000 at 7.5% interest rate</p>
<p><strong>Loan 2</strong>: 13,000 at 8.25% interest rate</p>
<p>~insert magical refinancing here~</p>
<p>New Loan: $23,000 at 5.25% interest rate</p>
<p>Notice that the new loan is for the same amount of total debt, however, the interest rate is lower. This would save you money in the long run since less interest would accrue.</p>


<h2 id="example-of-refinancing-student-debt" class="wp-block-heading">Example of Refinancing Student Debt</h2>
<p>To contextualize this information, let’s look at an example. Let’s say you took out a student loan of $36,405 at an interest rate of 4.66% during undergrad and you plan on paying it off over the next 10 years at a monthly rate of around $380. By the time you finish paying it off, you will have actually paid $45,614.52–the original $36,405 <em>plus</em> $9,208.42 in interest. On the other hand, if you refinance for an interest rate of 2.59% over the same ten-year period, you can reduce your monthly payments to $344.69, and pay only $4,956.52 in interest, saving $4,251.50 over the lifetime of the loan.</p>


<h2 id="what-do-i-need-to-refinance" class="wp-block-heading">What Do I Need to Refinance?</h2>
<p>Generally, you need a strong credit score (mid-high 600s), a stable income, or a qualified cosigner to refinance.</p>


<h2 id="should-i-refinance-my-loans" class="wp-block-heading">Should I Refinance My Loans?</h2>
<p>You should refinance your loans if it will save money. Generally, a lower interest rate and shorter repayment plan will lead to extra savings.</p>
<h3 id="90-when-you-should-refinance-" class="wp-block-heading">When You <em>Should </em>Refinance</h3>
<ol>
<li><strong>If the savings will be significant.</strong> If you can qualify for a better interest rate, it is a good idea to refinance. You do not need to have a <em>perfect </em>credit history. As long as you can get that lower interest rate, you’re likely going to save some coin.</li>
<li><strong>If you have student loans with high variable interest rates</strong>. Variable interest rates do just as they’re called – they vary. It is challenging to predict what payments will be with a variable interest rate as it is always changing. Whether your variable interest rate is currently high or low, it may be a good idea to refinance if you can secure a lower fixed rate.</li>
<li><strong>If the economy supports low interest rates. </strong>Interest rates are impacted by economic factors. If the rate environment is good, rates may be lower, and it may be a good idea to take advantage of that.</li>
<li><strong>If your finances have improved.</strong> If your financial situation has improved since you first took out your loans, you may qualify for a better interest rate on a new loan.</li>
</ol>


<h3 id="91-when-you-should-not-refinance-" class="wp-block-heading">When You <em>Should Not </em>Refinance</h3>
<ol>
<li><strong>If you’re planning to pursue student loan forgiveness.</strong> If you are pursuing a program such as <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a>, you should not refinance your student debt as it would make you ineligible for the program.</li>
<li><strong>If you have Federal Loans and may experience a drop in income.</strong> When you refinance federal student loans, you lose the option to participate in federal repayment programs such as income-driven repayment and federal loan relief options.</li>
<li><strong>If you’ve declared bankruptcy recently.</strong> It is significantly more difficult to refinance student debt if you have declared bankruptcy. While not impossible to refinance under these conditions, many lenders will require around 4-10 years to have passed since the bankruptcy filing before lending.</li>
<li><strong>If you’ve had to default on student debt.</strong> Defaulting on a student loan is a red flag to lenders as it tells them that you may not be able to make consistent loan payments.</li>
</ol>


<h2 id="how-many-times-can-i-refinance" class="wp-block-heading">How Many Times Can I Refinance?</h2>
<p>You are allowed to refinance as many times as you like, free of cost.</p>


<h2 id="final-thoughts-from-the-sparrow-nest" class="wp-block-heading">Final Thoughts from the Sparrow Nest</h2>
<p>Our goal is to bring simplicity, choice, and transparency to an otherwise inefficient and opaque lending process. We hope this guide helps.</p>


It is no secret that the cost of education has increased dramatically over the last several decades. At the current rate, the cost of college doubles every nine years. The rapid increase in the cost of education has forced generations of Americans to rely on student loans to afford a degree. Unsurprisingly, almost <a href="https://studentloanhero.com/student-loan-debt-statistics/">70% of students</a> in the Class of 2019 took out student loans.

Since borrowing affects most students in the US, it is important to know how the student lending industry operates. In this article, we’ll break down everything you need to know about student loans.

<h2 id="12-types-of-federal-student-loans-" class="wp-block-heading">Types of Federal Student Loans</h2>
There are three types of federal student loans:
<ol>
 	<li><strong><a href="#direct_subsidized_loans" data-type="internal" data-id="#direct_subsidized_loans">Direct Subsidized Loans</a></strong></li>
 	<li><a href="#direct_unsubsidized_loans"><strong>Direct Unsubsidized Loans</strong></a></li>
 	<li><strong><a href="#direct_plus_loans" data-type="internal" data-id="#direct_plus_loans">Direct PLUS Loans</a></strong></li>
</ol>
We’ll break down what you need to know about each of the loans below.

 
<h3 id="13-direct-subsidized-loans-" class="wp-block-heading">Direct Subsidized Loans</h3>
 
<h3 id="14-who-can-get-direct-subsidized-loans" class="wp-block-heading">Who can get Direct Subsidized loans?</h3>
 

In order to qualify for Direct Subsidized loans, you must be an eligible undergraduate student who demonstrates financial need.

<h3 id="22-how-much-can-you-borrow" class="wp-block-heading">How much can you borrow?</h3>
Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.

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.

<h3 id="23-whats-the-interest-rate-on-direct-unsubsidized-loans-" class="wp-block-heading">What's the interest rate on Direct Unsubsidized loans?</h3>
The interest rate for Direct Unsubsidized loans is 5.28% for 2021-22.

<h3 id="24-is-there-an-origination-fee" class="wp-block-heading">Is there an origination fee?</h3>
 

Similar to Subsidized loans, when you take out a Direct Unsubsidized loan, you will be charged an origination fee -- a fee meant to offset a lender’s cost for issuing a loan. The origination fee is deducted from the loan disbursement before you or the school receives the funds. Currently, the origination fee on Direct Unsubsidized loans is 1.057%, but it changes each year on October 1st.

So for example, if you borrow $20,000 in Direct Unsubsidized loan, 1.057% (or $211) will go to the federal government, while the remaining $19,789 will go to your school (and then you).

<h3 id="25-who-will-pay-the-interest-" class="wp-block-heading">Who will pay the interest?</h3>
 

When you take out a Direct Unsubsidized loan, you have a 6 month grace period. Unlike with Direct Subsidized loans, however, you are responsible for all interest charges on unsubsidized loans, from the moment you take out the loan until the day you pay it off.

<h3 id="26-thoughts-from-the-sparrow-nest" class="wp-block-heading">Thoughts from the Sparrow Nest</h3>
 
<p id="direct_unsubsidized_loans">Direct Unsubsidized loans are a great choice for undergraduate who have exhausted their Direct Subsidized loans. They're also the preferred option for graduate and professional degree students who need federal funding. That is because of the relatively low interest rate and higher borrowing limits.</p>
With that said, if you meet the financial need requirements to qualify for subsidized loans, you’ll pay less over time than you would with unsubsidized loans. Unlike with Direct Subsidized loans, you are responsible for all interest charges on Unsubsidized loans, from the moment you take out the loan until the day you pay it off.

<h2>Direct Subsidized Loans vs Direct Unsubsidized Loans</h2>

$5,500 – $12,500, depending on your year in school and dependency status

<strong>Interest while</strong>
<strong>in school</strong>

Government pays interest while you’re in school

Interest accrues while you’re in school that you must eventually pay

Undergraduate and graduate or professional degree students

<h2 id="direct-plus-loans" class="wp-block-heading">Direct PLUS Loans</h2>
<h3 id="29-what-are-the-different-types-of-direct-plus-loans" class="wp-block-heading">What are the different types of Direct PLUS loans?</h3>
There are two types of Direct PLUS loans: <strong>Grad PLUS loans</strong> and <strong>Parent PLUS loans.</strong>

<strong>Grad PLUS loans</strong> allow graduate and professional students to borrow money to pay for their own education. You can use <a href="https://www.sparrowfi.com/blog/everything-you-need-to-know-about-grad-plus-loans">Grad PLUS loans</a> to cover any costs not already covered by other financial aid or grants, up to the full cost of attendance.

<strong>Parent PLUS loans</strong> allow parents of dependent students to borrow money to cover any costs not already covered by the student’s financial aid package, up to the full cost of attendance. The program does not set a cumulative limit to how much parents may borrow. <a href="https://www.sparrowfi.com/blog/everything-you-need-to-know-about-parent-plus-loans">Parent PLUS loans</a> are the financial responsibility of the parents, not the student.

<h3 id="30-who-can-get-direct-plus-loans" class="wp-block-heading">Who can get Direct PLUS loans?</h3>
While most federal student loans are need or merit-based, Direct PLUS loans are based on a credit check. If you have a poor credit history, you will have a harder time qualifying and might require an “endorser” (essentially a cosigner, who pledges to pay back the loan if the primary borrower cannot). Even if you have an adverse credit history, you may still be able to receive a PLUS loan if you meet <a href="https://studentaid.gov/understand-aid/types/loans/plus">additional requirements</a>.

<h3 id="31-how-much-can-you-borrow" class="wp-block-heading">How much can you borrow?</h3>
The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received.

<h3 id="32-whats-the-interest-rate-on-direct-plus-loans-" class="wp-block-heading">What’s the interest rate on Direct PLUS loans?</h3>
The interest rate for Direct PLUS loans is 6.28% for 2021-22.
<h3 id="33-is-there-an-origination-fee" class="wp-block-heading">Is there an origination fee?</h3>
Similar to Subsidized and Unsubsidized loans, when you take out a Direct PLUS Loan, you will be charged an origination fee — a fee meant to offset a lender’s cost for issuing a loan. The origination fee is deducted from the loan disbursement before you or the school receives the funds. Currently, the origination fee on Direct PLUS Loans is 4.228%, but it changes each year on October 1st.

So for example, if you borrow $12,500 in Direct PLUS Loan, 4.228% (or $528) will go to the federal government, while the remaining $11,971 will go to your school (and then you).

<h3 id="34-who-will-pay-the-interest-" class="wp-block-heading">Who will pay the interest?</h3>
Direct PLUS loans are not subsidized, which means that interest accrues while you are enrolled in school. Direct PLUS loans also do not have a “grace period,” which means you must start repaying PLUS loans as soon as you or the school receives the loan funds.

<h3 id="35-thoughts-from-the-sparrow-nest" class="wp-block-heading">Thoughts from the Sparrow Nest</h3>
Direct PLUS loans can be a good option for parents and grad students, alike.

If you’re a parent, you should take out PLUS loans if you need the safety net or want the benefits these loans offer, such as income-driven repayment plans and Public Service Loan Forgiveness.
<p id="federal_student_loan_interest_rates">If you’re a student, you should take out PLUS loans to pay for grad school only after you have maxed out the borrowing limit on lower-interest unsubsidized loans.</p>

<h2 id="federal-student-loan-interest-rates" class="has-text-align-center wp-block-heading">Federal Student Loan Interest Rates</h2>

<strong>Direct Subsidized Loans &amp; Direct Unsubsidized Loans</strong>

<strong>Direct Unsubsidized Loans</strong>

Parents and Graduate or Professional Students

<figure class="wp-block-table is-style-stripes">
<figcaption>Note: The interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and PLUS loans first disbursed on or after July 1, 2021 and before July 1, 2022. Rates and fees are subject to change.</figcaption></figure>
<h2 id="federal-student-loan-repayment-plans" class="wp-block-heading">Federal Student Loan Repayment Plans</h2>
Federal student loans offer several repayment options depending on the loan type. These options include:
<ol>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#standard_repayment" data-type="internal" data-id="#standard_repayment">Standard Repayment</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#graduate_repayment">Graduated Repayment</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#extended_repayment" data-type="internal" data-id="#extended_repayment">Extended Repayment</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#income_driven_repayment" data-type="internal" data-id="#income_driven_repayment">Income-Driven Repayment</a></strong></li>
</ol>
<p id="standard_repayment">Check out the information below for a complete breakdown of the different repayment options for federal student loans.</p>

<h3 id="38-standard-payment-" class="wp-block-heading">Standard Payment</h3>
The standard payment plan is available to all borrowers and is great if you want to pay off your debt in the shortest period of time. With a standard student loan payment option, you would make equal monthly payments for 10 years. You’ll pay less interest and pay off your loans faster than you would on other plans.
<h4 id="39-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
 	<li>All borrowers are eligible for this plan.</li>
</ul>
<h4 id="40-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized Loans</li>
 	<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
 	<li>All PLUS loans</li>
 	<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>

<h2 id="0-what-is-a-student-loan-" class="wp-block-heading"><strong>What is a Student Loan?</strong></h2>
A student loan is money borrowed from the government or a private lender, designated for educational purposes. Typically, these loans cover the cost of tuition, books, supplies, and room-and-board.

You may have higher monthly payments compared to the other options

Your monthly payment would remain the same even if your income dropped

Shorter repayment period compares to other options

<h3 id="43-graduated-repayment-" class="wp-block-heading">Graduated Repayment</h3>
The graduated repayment plan allow you to start your payments off at a lower amount and gradually increase to the full payment over a 10-year period. This plan is ideal if you plan to start your career at a lower income level or do not plan to dive into full-time work immediately after graduation.
<h4 id="44-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
 	<li>All borrowers are eligible for this plan.</li>
</ul>
<h4 id="45-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized Loans</li>
 	<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
 	<li>All PLUS loans</li>
 	<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>

You would pay slightly more over time in comparison to the standard repayment plan since more interest would accrue while you’re making smaller payments

You could be in a tough spot if your income does not grow over time as you expect

The 10 year repayment period allows you to pay off your loans faster compared to other plans

Your payments might align better with the entry-level wages many new graduates take on

<h3 id="48-extended-repayment-" class="wp-block-heading">Extended Repayment</h3>
The extended repayment plan is available to all borrowers except those with Federal Direct Loans or Federal Family Education Loans (FFEL) that owe less than $30,000. This option allows for either a fixed or graduated payment, leading to full repayment by the end of a 25 year period.

This option is ideal if you have a hefty total loan amount and need a smaller monthly payment.
<h4 id="49-eligible-borrowers" class="wp-block-heading">Eligible Borrowers</h4>
<ul>
 	<li>If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.</li>
</ul>
<h4 id="50-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized Loans</li>
 	<li>Subsidized and Unsubsidized Federal Stafford Loans</li>
 	<li>All PLUS loans</li>
 	<li>All Consolidation Loans (Direct or FFELP)</li>
</ul>

There is no option for loan forgiveness as with the income-driven repayment options

The longer repayment period would cause you to pay more interest over time in comparison to the other plans

Lower monthly payments relative to other plans

You have the option to choose either fixed or graduated payments

<h3 id="53-income-driven-repayment-" class="wp-block-heading">Income-Driven Repayment</h3>
Income-driven repayment plans use your income to set a monthly payment. This amount is typically 10-20% of your income and can be as low as $0 if you’re unemployed. With these plans, your loan term is extended, usually to around 12-25 years. When this term is up, the remaining balance you owe will sometimes be forgiven. However, you would be required to pay taxes on the forgiven amount, so you are not totally off the hook.

There are 5 different income-driven repayment options offered for federal student loans. Each of the income-driven repayment options has its own specific requirements in order to qualify, but they’re all ideal for people whose monthly income is too low to pay the standard monthly payment.
<ol>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#PAYE" data-type="internal" data-id="#PAYE"><strong>Pay As You Earn Repayment Plan (PAYE)</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#REPAYE"><strong>Revised Pay As You Earn Repayment Plan (REPAYE)</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#IBR"><strong>Income-Based Repayment Plan (IBR)</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#ICR"><strong>Income-Contingent Repayment Plan (ICR)</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#ISR"><strong>Income-Sensitive Repayment (ISR)</strong></a></li>
</ol>

<h4 id="54-1-pay-as-you-earn-repayment-plan-paye" class="wp-block-heading">1. Pay As You Earn Repayment Plan (PAYE)</h4>
The PAYE plan makes your monthly payment 10% of your discretionary income. The payments are reevaluated every year and updated if your income changes for any reason or if your family size changes. If you have not repaid your loan in full after 20 years, the remaining balance will be forgiven.
<h4 id="55-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
 	<li>If you are a new borrower from either on or after October 1, 2007 and received a Direct Loan disbursement on or after October 1, 2011</li>
</ul>
<h4 id="56-eligible-loans" class="wp-block-heading">Eligible Loans</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized</li>
 	<li>Direct PLUS loans for students</li>
 	<li>Direct Consolidated Loans not including PLUS loans made to parents</li>
</ul>

<h4 id="57-2-revised-pay-as-you-earn-repayment-plan-repaye" class="wp-block-heading">2. Revised Pay As You Earn Repayment Plan (REPAYE)</h4>
The REPAYE plan makes your monthly payments 10% of your discretionary income and is recalculated every year in the same way the PAYE plan is. For undergraduate loans, your remaining balance will be forgiven after 20 years, and for graduate loans, 25 years.
<h4 id="58-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
 	<li>Any Direct Loan borrowers with an eligible loan type</li>
</ul>
<h4 id="59-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized</li>
 	<li>Direct PLUS loans for students</li>
 	<li>Direct Consolidated Loans not including PLUS loans made to parents</li>
</ul>

<h4 id="60-3-income-based-repayment-plan-ibr" class="wp-block-heading">3. Income-Based Repayment Plan (IBR)</h4>
An IBR plan sets monthly payments at either 10 or 15 percent of your discretionary income, neither amounting to more than what you would pay under the 10-year standard repayment plan. Payments are reevaluated every year based on changes in income and family size. Depending on when you received your first loan, your remaining balance will be forgiven after either 20 or 25 years. It is important to note that you may have to pay taxes on this forgiven amount.
<h4 id="61-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
 	<li>Those with high debt relative to their income</li>
</ul>
<h4 id="62-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized</li>
 	<li>Subsidized and Unsubsidized Stafford Loans</li>
 	<li>All PLUS loans for students</li>
 	<li>Consolidation Loans not including PLUS loans made to parents</li>
</ul>

<h4 id="63-4-income-contingent-repayment-plan-icr" class="wp-block-heading">4. Income-Contingent Repayment Plan (ICR)</h4>
The ICR plan sets monthly payments at whichever is lesser: 20% of discretionary income OR the monthly payment you’d have on a plan with a fixed payment over 12 years, adjusted to your income. Payments are reevaluated and updated based on changes in your income and family size. Outstanding balances are forgiven after 25 years.
<h4 id="64-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
 	<li>Any Direct Loan borrower with an eligible loan type</li>
</ul>
<h4 id="65-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
 	<li>Direct Subsidized and Unsubsidized</li>
 	<li>Direct PLUS loans for students</li>
 	<li>Direct Consolidation Loans</li>
</ul>

<h2 id="1-why-borrow-a-student-loan-" class="wp-block-heading"><strong>Why Borrow a Student Loan?</strong></h2>
You should only take out student loans after you've exhausted <a href="https://www.sparrowfi.com/blog/the-4-types-of-financial-aid-scholarships-grants-work-study-and-loans">grants, work-study, and scholarships</a>.

While it is best to avoid debt, many financial professionals classify student loans as “good debt." That's because a college education is seen as an investment in yourself that helps increase your lifetime earning potential. In other words, the career earnings unlocked by a college degree are worth more than the loan. On average, college graduates earn more money and have better job security across their professional careers than those with only a high school diploma.

<h4 id="66-5-income-sensitive-repayment-isr" class="wp-block-heading">5. Income-Sensitive Repayment (ISR)</h4>
The ISR plan sets monthly payments based on your annual income with the caveat that the loan is paid in full within 15 years.
<h4 id="67-eligible-borrowers" class="wp-block-heading">Eligible Borrowers:</h4>
<ul>
 	<li>Only for FFELP Program loans</li>
</ul>
<h4 id="68-eligible-loans" class="wp-block-heading">Eligible Loans:</h4>
<ul>
 	<li>Subsidized and Unsubsidized Stafford Loans</li>
 	<li>FFELP PLUS Loans</li>
 	<li>FFELP Consolidation Loans</li>
</ul>

<h3 id="69-pros-and-cons-of-income-driven-repayment" class="has-text-align-center wp-block-heading">Pros and Cons of Income-Driven Repayment</h3>

You may pay more in interest with a longer repayment period

The total amount you pay could be more than the standard repayment plan depending on the plan you choose

You must meet certain requirements in order to qualify

Your monthly payments would likely be more affordable

Your monthly payments would decrease if your income decreased, so you would not be locked into paying a certain amount each month even if you fall into economic hardship

<h2 id="private-student-loans" class="wp-block-heading"><strong>Private Student Loans</strong></h2>
Private student loans can help you pay for college after you’ve exhausted scholarships, grants, and federal loans.

In this section, we’ll break down:
<ul>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#who-makes-private-student-loans">Who makes private student loans</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#who-can-get-a-private-student-loan">Who can get a private student loan</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#How-much-you-can-borrow">How much you can borrow</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#How-interest-rates-are-determined">How interest rates are determined</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#What-is-a-co-signer">What is a cosigner</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#Private-student-loan-repayment-plans">Private student loan repayment plans</a></strong></li>
 	<li><strong><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#Discounts-and-fees">Discounts and fees</a></strong></li>
</ul>

<h2 id="who-makes-private-student-loans" class="wp-block-heading">Who Makes Private Student Loans?</h2>
<p id="who-can-get-a-private-student-loan">Private loans are made by private lenders such banks, credit unions, non-profits, and online lenders, and have terms and conditions that are set by the lender. Private student loans typically have higher interest rates and less flexible repayment options compared to federal student loans.</p>

<h2 id="who-can-get-a-private-student-loan" class="wp-block-heading">Who Can Get a Private Student Loan?</h2>
To qualify for a private student loan, you’ll need to attend an eligible school, as well as meet any age, education, or citizenship requirements. You’ll also need to meet a lender’s criteria for credit and income, or apply with a cosigner who does.
<p id="How-much-you-can-borrow">While most private student loans are credit-based, there are a handful of private student loans that are future-income-based. These are great for students who cannot meet the credit requirements and do not have access to a qualified cosigner.</p>

<h2 id="how-much-can-you-borrow" class="wp-block-heading">How Much Can You Borrow?</h2>
<p id="How-interest-rates-are-determined">Private student loans have a higher borrowing limit compared to federal loans. Private lenders allow you to borrow up to your school’s cost of attendance. With that said, it is wise to only borrow what you need — and what you can afford to repay.</p>

<h2 id="how-are-interest-rates-determined" class="wp-block-heading">How are Interest Rates Determined?</h2>
The interest rate on your private student loan depends on a few main factors:
<ol id="credit_score">
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#credit_score"><strong>Credit score</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#type_of_interest_rate"><strong>Type of interest rate (fixed vs. variable)</strong></a></li>
 	<li><a href="https://www.sparrowfi.com/blog/ultimate-guide-to-student-loans#term_of_the_loan"><strong>Term of the loan</strong></a></li>
</ol>
<h3 id="75-credit-score" class="wp-block-heading">Credit score</h3>
Most private student loans are credit-based. That means the lender looks at your history of borrowing money and paying it back on time. They want to know how creditworthy, or how responsible you are with credit, before approving your student loan application.
<p id="type_of_interest_rate">In general, a <a href="https://www.sparrowfi.com/blog/what-credit-score-is-needed-for-a-student-loan">higher credit score</a> leads to a lower interest rate. The reverse is also true — a lower credit score leads to a higher interest rate.</p>

<h3 id="76-type-of-interest-rate-fixed-vs-variable-" class="wp-block-heading">Type of interest rate (fixed vs variable)</h3>
Most private lenders allow you to choose between a <a href="https://www.sparrowfi.com/blog/which-is-better-variable-vs-fixed-interest-rate-student-loans">fixed and variable</a> interest rate.

A fixed interest rate stays the same for the life of the loan. This means you’ll have a predictable student loan payment each month.

A variable interest rate fluctuates throughout the life of the loan depending on economic conditions. Variable interest rates often start out lower than fixed rates but can change, so your monthly student loan payments may vary considerably from month to month.
<p id="term_of_the_loan">In general, fixed student loan interest rates are a better option than variable rates. That is because fixed rates always stay the same, so you will know exactly how much you need to pay each month. If you’re unsure which rate to choose, go with fixed; it is the safer option and allows you to budget accordingly. If you’re comfortable taking a risk to potentially save on interest, consider a variable rate.</p>

<h3 id="77-loan-term" class="wp-block-heading">Loan term</h3>
Loan term, also called loan duration, is the length of time you’ll have to pay off your loan. Private student loan terms usually range between 5-20 years, with plenty of options in between. Keep in mind that the longer your loan term, the more time interest accrues — this leads to higher total cost.

A simple way to think about is:

The shorter the loan term, the higher the monthly payments. If you’re making high monthly payments, the faster the loan will be paid off and the lower the total cost, since interest has less time to accrue.
<p id="What-is-a-co-signer">On the other hand, the longer the loan term, the lower the monthly payments.If you’re making low monthly payments, the slower the loan will be paid off and the higher the total cost, since interest has more time to accrue.</p>

<h2 id="2-types-of-student-loans-" class="wp-block-heading"><strong>Types of Student Loans</strong></h2>
There are three main types of student loans:
<ol>
 	<li><strong><a href="#federal_loans" data-type="internal" data-id="#federal_loans">Federal Student Loans</a></strong></li>
 	<li><a href="#private_student_loans" data-type="internal" data-id="#private_student_loans"><strong>Private Student Loans</strong></a></li>
 	<li><a href="#refinance_loans" data-type="internal" data-id="#refinance_loans"><strong>Student Loan</strong> <strong>Refinancing</strong></a></li>
</ol>
Federal student loans are provided by the U.S. Department of Education, while private student loans and student loan refinancing are supported by banks, credit unions, non-profits, and other private lenders.
<p id="federal_loans">Of the three types of debt, federal loans usually have the lowest interest rates and most flexible repayment options. With that said, the particular loan that is best for you depends on your financial need, year in school, and credit history.</p>

<h2 id="what-is-a-cosigner" class="wp-block-heading">What is a Cosigner?</h2>
<p id="Private-student-loan-repayment-plans">If you cannot qualify for a student loan on your own, most private lenders will encourage you to apply with a cosigner. A cosigner is a person – such as a parent, close family member, or friend – who pledges to pay back the loan if you do not. This can be a benefit both to you and your lender since many many college-bound high school students have not had time to build up their own credit. However, it is risky to be the cosigner because if the student is unable to pay the loan back, the cosigner is responsible to pay on their behalf.</p>

<h2 id="private-student-loan-repayment-plans" class="has-text-align-center wp-block-heading">Private Student Loan Repayment Plans</h2>
While repayment options depend on the lender, most private lenders offer some variation of the repayment plans below.

Make full payments as soon as the loan is disbursed, while you’re still in school.

You will minimize the interest you pay, resulting in the greatest savings. Because you’re paying down both interest and principal while you’re still in school, you’ll already have made a good start on repaying your loan by the time you graduate.

For many students, it is not realistic to make full monthly payments while still enrolled in college.

Pay only interest while you’re in school.

Your monthly payments will be more manageable, and your loan balance will not grow while you’re in school.

You will not make any progress paying down your loan balance while you’re a student. But at least you will not owe more than you borrowed when it is time to start making full payments.

Pay $25 per month while you’re in school to reduce accrued interest.

You can keep your loan balance in check, and reduce the total amount repaid.

You’ll still owe more than you borrowed when you graduate, but your loan balance will not grow as quickly.

Do not make any payments while you’re in school. Begin repayment after graduation or 6 months after graduation.

You will not have to make payments while you’re in school.

You will likely pay the highest overall cost since unpaid interest will be added to your principal amount at the end of your grace period.

<h2 id="are-there-any-discounts-or-fees-on-private-student-loans" class="wp-block-heading">Are there any discounts or fees on private student loans?</h2>
<h3 id="81-auto-pay-discount" class="wp-block-heading">Auto-pay discount</h3>
Many lenders allow you to get an <a href="https://www.sparrowfi.com/blog/how-to-save-thousands-on-student-loans-with-an-autopay-discount">interest rate reduction</a> by signing up for automatic payments. The autopay discount generally starts at 0.25% but can go up to 2%, depending on the lender.
<h3 id="82-origination-fee" class="wp-block-heading">Origination fee</h3>
An origination fee is a you must pay to offset a lender’s cost for issuing a loan. Private loans rarely have an origination fee, but all federal loans do (although at different rates: 1.057% for federal subsidized and unsubsidized and 4.228% for Federal PLUS).
<h3 id="83-prepayment-penalty" class="wp-block-heading">Prepayment penalty</h3>
A prepayment penalty is a fee you would have to pay if you want to repay your loans early. It is not allowed on any student loans, federal or private.
<h3 id="84-application-fee" class="wp-block-heading">Application fee</h3>
There is generally no cost to apply for private student loans.

<h2 id="student-loan-refinance" class="wp-block-heading"><strong>Student Loan Refinance</strong></h2>

<h2 id="what-is-student-loan-refinancing" class="wp-block-heading">What is Student Loan Refinancing?</h2>
<a href="https://www.sparrowfi.com/blog/the-ultimate-guide-to-refinancing-your-student-loans">Student loan refinancing</a> is when a lender pays off your existing loans and gives you a new one with a lower interest rate or repayment plan. In the long run, this saves you money since you’ll be paying less interest.

Refinancing could look like this [<em>note: this is a very basic example</em>]:

<strong>Loan 1:</strong> $10,000 at 7.5% interest rate

<strong>Loan 2</strong>: 13,000 at 8.25% interest rate

~insert magical refinancing here~

New Loan: $23,000 at 5.25% interest rate

Notice that the new loan is for the same amount of total debt, however, the interest rate is lower. This would save you money in the long run since less interest would accrue.

<h2 id="example-of-refinancing-student-debt" class="wp-block-heading">Example of Refinancing Student Debt</h2>
To contextualize this information, let’s look at an example. Let’s say you took out a student loan of $36,405 at an interest rate of 4.66% during undergrad and you plan on paying it off over the next 10 years at a monthly rate of around $380. By the time you finish paying it off, you will have actually paid $45,614.52–the original $36,405 <em>plus</em> $9,208.42 in interest. On the other hand, if you refinance for an interest rate of 2.59% over the same ten-year period, you can reduce your monthly payments to $344.69, and pay only $4,956.52 in interest, saving $4,251.50 over the lifetime of the loan.

<h2 id="what-do-i-need-to-refinance" class="wp-block-heading">What Do I Need to Refinance?</h2>
Generally, you need a strong credit score (mid-high 600s), a stable income, or a qualified cosigner to refinance.

<h2 id="should-i-refinance-my-loans" class="wp-block-heading">Should I Refinance My Loans?</h2>
You should refinance your loans if it will save money. Generally, a lower interest rate and shorter repayment plan will lead to extra savings.
<h3 id="90-when-you-should-refinance-" class="wp-block-heading">When You <em>Should </em>Refinance</h3>
<ol>
 	<li><strong>If the savings will be significant.</strong> If you can qualify for a better interest rate, it is a good idea to refinance. You do not need to have a <em>perfect </em>credit history. As long as you can get that lower interest rate, you’re likely going to save some coin.</li>
 	<li><strong>If you have student loans with high variable interest rates</strong>. Variable interest rates do just as they’re called – they vary. It is challenging to predict what payments will be with a variable interest rate as it is always changing. Whether your variable interest rate is currently high or low, it may be a good idea to refinance if you can secure a lower fixed rate.</li>
 	<li><strong>If the economy supports low interest rates. </strong>Interest rates are impacted by economic factors. If the rate environment is good, rates may be lower, and it may be a good idea to take advantage of that.</li>
 	<li><strong>If your finances have improved.</strong> If your financial situation has improved since you first took out your loans, you may qualify for a better interest rate on a new loan.</li>
</ol>

<h2 id="3-federal-student-loans-" class="wp-block-heading"><strong>Federal Student Loans</strong></h2>
After you've exhausted grants, work-study, and scholarships, you should turn to federal student loans to pay for college.

In this section, we'll break down:
<ul>
 	<li><strong><a href="#how_to_apply">How to apply for federal student loans</a></strong></li>
 	<li><strong><a href="#benefits_of_federal_student_loans" data-type="internal" data-id="#benefits_of_federal_student_loans">Benefits of federal student loans</a></strong></li>
 	<li><strong><a href="#types_of_federal_student_loans">Types of federal student loans</a></strong></li>
 	<li><a href="#federal_student_loan_interest_rates"><strong>Federal student loan interest rates</strong></a></li>
 	<li><a href="#federal_student_loan_repayment_plans"><strong>Federal student loan repayment plans</strong></a></li>
</ul>

<h3 id="91-when-you-should-not-refinance-" class="wp-block-heading">When You <em>Should Not </em>Refinance</h3>
<ol>
 	<li><strong>If you’re planning to pursue student loan forgiveness.</strong> If you are pursuing a program such as <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a>, you should not refinance your student debt as it would make you ineligible for the program.</li>
 	<li><strong>If you have Federal Loans and may experience a drop in income.</strong> When you refinance federal student loans, you lose the option to participate in federal repayment programs such as income-driven repayment and federal loan relief options.</li>
 	<li><strong>If you’ve declared bankruptcy recently.</strong> It is significantly more difficult to refinance student debt if you have declared bankruptcy. While not impossible to refinance under these conditions, many lenders will require around 4-10 years to have passed since the bankruptcy filing before lending.</li>
 	<li><strong>If you’ve had to default on student debt.</strong> Defaulting on a student loan is a red flag to lenders as it tells them that you may not be able to make consistent loan payments.</li>
</ol>

<h2 id="how-many-times-can-i-refinance" class="wp-block-heading">How Many Times Can I Refinance?</h2>
You are allowed to refinance as many times as you like, free of cost.

<h2 id="final-thoughts-from-the-sparrow-nest" class="wp-block-heading">Final Thoughts from the Sparrow Nest</h2>
Our goal is to bring simplicity, choice, and transparency to an otherwise inefficient and opaque lending process. We hope this guide helps.

<h2 id="4-how-to-apply-for-federal-student-loans" class="wp-block-heading">How to Apply for Federal Student Loans</h2>
To apply for federal student loans, you must fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is the go-to form that determines your eligibility for federal financial aid.

To receive federal support, you must be a U.S. citizen, have a valid social security number, have earned a high school diploma, and be enrolled at an eligible college or university.

The FAFSA is available starting Oct. 1 the year before a you plans to enroll. For example, if you are enrolling for the 2022-23 school year, the FAFSA will be available on Oct. 1, 2021.
<p id="benefits_of_federal_student_loans">The FAFSA is accepted, reviewed, and distributed on a rolling basis. You should complete the <a href="https://studentaid.gov/h/apply-for-aid/fafsa">FAFSA form</a> as early as possible. The earlier you apply, the better your chances are for receiving financial aid awards.</p>

<h2 id="5-benefits-of-federal-student-loans" class="wp-block-heading">Benefits of Federal Student Loans</h2>
Federal student loans come with many benefits and protections that are not typically offered with private student loans. Designed to reduce the burden of repayment, these advantages include:
<ol>
 	<li><strong><a href="#lower_rates" data-type="internal" data-id="#lower_rates">Lower rates</a></strong></li>
 	<li><strong><a href="#no_credit_check">No credit check </a></strong></li>
 	<li><strong><a href="#no_cosigner_requirement">No cosigner requirement</a></strong></li>
 	<li><strong><a href="#forbearance_deferment_options">Forbearance and deferment options</a></strong></li>
 	<li><strong><a href="#income_driven_repayments">Income-driven repayments</a></strong></li>
 	<li><strong><a href="#loan_forgiveness" data-type="internal" data-id="#loan_forgiveness">Loan forgiveness</a></strong></li>
</ol>

<h3 id="6-1-lower-rates" class="wp-block-heading">1. Lower rates</h3>
Federal student loans typically have lower interest rates than private loans. Rates for new federal loans are also fixed, meaning they’ll stay constant during the entire loan term.
<h3 id="7-2-no-credit-check" class="wp-block-heading">2. No credit check</h3>
<p id="no_cosigner_requirement">Unlike private student loans, most federal loans do not require you to have credit history. The only type of federal loan that requires a credit check is <a href="https://www.sparrowfi.com/blog/what-are-plus-loans">Direct PLUS</a>, which is available to graduate students and parents. This makes federal student loans the best option if you have a limited credit history.</p>

<h3 id="8-3-no-cosigner-requirement" class="wp-block-heading">3. No cosigner requirement</h3>
Federal student loans do not require <a href="https://www.sparrowfi.com/blog/what-is-a-private-student-loan-cosigner">cosigners</a>. This means you do not need to rely on a relative for financial help, making the process much easier for those legally and financially independent.

There is one exception: if you are a graduate student or parent applying for a Direct PLUS loan and have a poor credit history, you may not be eligible without an “endorser,” which is similar to a cosigner.
<h3 id="9-4-forbearance-and-deferment-options-" class="wp-block-heading">4. Forbearance and deferment options</h3>
Federal student loans offer <a href="https://www.sparrowfi.com/blog/forbearance-vs-deferment-vs-forgiveness">forbearance and deferment</a> options if you face economic hardship. Forbearance and deferment allow you to postpone your student loan payments for up to three years.
<h3 id="10-5-income-driven-repayment" class="wp-block-heading">5. Income-driven repayment</h3>
Federal student loans offer a repayment plan that is based on your income. With income-driven repayment, you pay a percentage of your income each month — or $0 if you have no income.
<h3 id="11-6-loan-forgiveness" class="wp-block-heading">6. Loan forgiveness</h3>
The <a href="https://www.sparrowfi.com/blog/what-is-public-service-loan-forgiveness">Public Service Loan Forgiveness</a> program allows you to have loans forgiven after at least 10 years of public service and 120 qualifying monthly payments.
<p id="types_of_federal_student_loans">Loan forgiveness is also available after you have made qualifying monthly payments in an income-driven repayment plan for 20 to 25 years.</p>

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