Types of Student Loans and How to Avoid Paying for Them

If you are a college student, chances are that you're very familiar with student loans. What you may not be as familiar with are the reasons you should avoid them and how you can pay them off after you graduate.

Obviously, it's best to avoid borrowing money to pay for college if possible. Some ways to do that are by finding scholarships and grants (which do not need to be paid back) and working part time while in school. Usually, though, the scholarships aren't sufficient to pay for the full cost of going to college, and working a job may or may not be practical, which brings us back to the loans.

If you must take out a loan, it's always best to get a subsidized loan; this means that the government pays the interest while you are in school, so when you graduate you don't owe any more money than you borrowed. There is a limit on how much you can borrow in subsidized loans, but it is generally enough to pay the tuition and fees at state colleges. (Private colleges, of course, are much more expensive). Unsubsidized loans are available for greater amounts, but the interest begins accumulating immediately.

Remember: once you've started college, you don't have to stop looking for scholarships! Many are available for upperclassmen, and new ones become available throughout the year. If you end up with extra cash on hand, you can even repay your loan early.

If you go into public service (such as teaching) after graduation, some types of loans may have a forgiveness provision that allows you to avoid paying the full amount. There is also a movement afoot to forgive student loan debt to stimulate the economy, although it has yet to gain any traction in Congress.

Want to learn how to compare college loans or find out about the movement to forgive student loans? Read on!

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