[MUSIC] If you're a recent high school graduate, an adult heading back to school, or a parent of a perspective college student pursuing a higher education, whether to follow a passion or increase your career opportunities is an investment in your future. Often scholarships, grants, savings, and income won't cover the cost of college educational loan. And this is where student loans come in. Student loans are often one of the first financial commitments you think. It can also affect your financial situation for years, even decades to come. In this video, you will learn more about the basics of student loans from start to finish. So you can understand the options before you from learning how student loans work, to how much you can borrow, to what you were signing up for when you make the right loan decisions for your family and your future. Now, what is a student loan exactly? A student loan is money you borrow for college and pay back with interest to cover college-related costs, tuition, room and board, and books. You have two main options when taking out a student loan, federal loans or private loans. First, let's dive into federal loans. Federal loans are from the US government. To see if you qualify for federal loans, you have to start with the free application for Federal Student Aid form, commonly called FAFSA. Which has to be filled out yearly when you apply for financial aid. Everyone who may need help paying for college is encouraged to fill out the FAFSA. The form is sent to schools of your choice, where the Financial Aid Office steps in to crunch numbers and figure out if you qualify for any financial aid, whether in the form of scholarships, grants, or loans. In general, the recommendation for students is to exhaust all federal student loan options before moving to private loans because of the favorable terms offered by federal loans. Federal student loans currently have fixed interest rates that stay the same over the life of the loan. And those interest rates are typically lower than a private loan. How much you can borrow in this case with a federal loan depends on whether you are an undergraduate, a graduate student, or apparent, as well as your year in school and dependency status. If all you're able to get from federal loans will not cover all of your needs, you can supplement with private loans. Private student loans are the second college loan option. Private loans are issued by a non-government lender like banks, credit unions, or other financial services companies. In this type of loan, your eligibility and terms really depend on your credit history. With private loans, parents and family friends are allowed to co-sign with you if your credit is not sufficient on its own. The limits of private loans vary by lender. But in general, the amount you can borrow cannot exceed your school's total cost of attendance. Fast forward to when all of this investment and your hard work in studying pays off, you graduate and you get your first job in your chosen field, hopefully. The hard work isn't over yet, paying your college debt back once you are in the real world requires a strategy and advance planning too. If you've experienced financial struggles trying to repay your student loans, you're not alone. So if you can't make ends meet to cover your payment, there are options to consider. You might be able to get payments temporarily reduced or deferred. You may be able to consolidate or refinance your student loans. Or if you have a federal loan, another possibility is that you might be eligible for an income-driven repayment plan to make those payments more affordable. These are all options that may be considered right away as ignoring the problem or stopping the payments only complicates the hardship. It can hurt your credit and unlike other debt, you can't erase your student loans by declaring bankruptcy. Navigating just how to finance your education to finally getting out of that college debt comes with challenges. It's part of the territory, but learning more about federal and private loan options can help arm you with the tools to be prepared. Student loans exist to help you secure your future. So with this new knowledge and a funding strategy before you, you can rest a little easier knowing that your college is covered and your mind is exactly where it needs to be on your education. [MUSIC]
