Student Loan Calculator

In the U.S., there are several types of student loan providers: government and private. Federal and state governments provide the lion’s share of student loans in the country and offer the considerable advantage of being subsidized. This means that students are not required to pay interest on their student loans while they are still considered students. Therefore, the cost of public, subsidized loans is lower than those offered by the private sector. As a matter of fact, federal student loans have some of the lowest interest rates around and do not require cosignatories, simply proof of acceptance to an educational institution. For these reasons, more than 90% of student debt today is in the form of federal loans.

Before delving into student loans, governmental or private, remember that there are other options to consider. Grants and scholarships do not require repayment as loans do, and some of these can cover the entirety of a student’s education costs, preempting the need for a loan. Work-study programs exist for students who have financial needs and are able to work part-time. Students with extra disposable income can pay it towards schooling costs before taking out student loans to help decrease the size and length of their student loans, making them more affordable in the long run. Ideally, only after exploring these options should students resort to taking out some of the student loans described below.

Federal Student Loan

Direct Subsidized and Direct Unsubsidized Loans (sometimes referred to as Stafford Loans)

Direct Subsidized Loans are need-based and dependent on Expected Family Contribution (EFC) to determine the loan amount. Because they are subsidized, there are 6-month grace periods after a person completes their studies before mandatory payments of the interest on the loans begin. Direct Unsubsidized Loans, on the other hand, are not need-based and interest on the loans begins accruing immediately after approval.

Direct PLUS Loans

These are typically for graduate or professional students enrolled at least half-time at an eligible school or parents of dependent undergraduate students enrolled at least half-time. Borrowers should have favorable credit histories, and the maximum possible loan amount is the difference between the cost of attendance for attending a particular school and any other financial aid received, such as scholarships. The interest rate on Direct PLUS loans tends to be higher than Stafford loans. There is an up-front fee called the origination fee that hovers around 4% of the loan amount.

Direct Consolidation Loans

Borrowers of multiple federal student loans can choose to consolidate them into a single Direct Consolidation Loan. The main reasons for consolidating include having one simple monthly payment instead of several, lower monthly payments but longer time period on loans, and access to additional income-driven repayment plans. Before choosing to consolidate, there are some tradeoffs to consider. For example, lengthier loans will result in more paid out for interest. Furthermore, consolidation may also negate certain benefits inherent in individual loans, such as interest rate discounts, principal rebates, or loan cancellation benefits.

State Student Loan

The fifty states have a wide variety of loan offers that differ immensely from state to state, usually offered by state agencies or state-chartered non-profit organizations. No two states will offer the same student loans. The list of available student loans offered by all fifty states is extensive; students should consult their state’s department of post-secondary education for details about state-specific aid that is available.

Similar to some federal student loans, certain state student loans may also contain forgiveness programs, though only if the student remains in the state after graduation. Whether student loans are forgivable or not will be dependent on what each state deems appropriate to forgive, which is usually reserved for pressing needs such as particular industries. Student loans for nursing or teaching are commonly forgiven for that reason.

Individual state filing deadlines are frequently earlier than the federal standard, so make sure timetables reflect whichever comes first. State student loans may also have additional, unique eligibility requirements. Generally, participants must be residents of the state or must be out-of-state students enrolled in a college within the particular state.