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How Do Student Loans Work?Student loan debt has grown from an expected part of education to a bonafide crisis in the making. As of 2017, it has become the second highest consumer debt category, second only to mortgage debt. To give you a bit of perspective, the average student in the Class of 2016 has $37,172 in student loan debt. The fact of the matter is that even if you work through school or try to get scholarships, the vast majority of students will still require some sort of loans. With higher education being a vital part of many career paths, knowing about student loans and how to handle them is a vital skill. This article will discuss what types of loans you may take, how to pay them back, and what options you have when the debt becomes too much.

Whether you are thinking of taking a loan out, are in the midst of repaying, or have your back against the wall, it is important to know your options.   Understanding Your LoansBefore taking out a loan, it is important to understand the difference between federal and private loans. Federal loans, as expected, come from the federal government. A private loan comes from a lender such as a bank in Riverside or wherever you live.

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Other examples include, credit union, state agency or school. As a rule of thumb, the trade-off between the two is that you get a variety of benefits with the federal loan, but can borrow more with a private loan. Also, there may be a limit to federal money you can borrow.In general, many students will require a combination of the two, depending on the price of their education and how much they need to take out in loans. Here are some of the special benefits you can get when you take out federal loans:You don’t have to repay your federal loans until graduating, leaving school, or changing enrollment status to less than half-time. Some private loans do not require this, but that isn’t always the case.

Generally, federal loans have more stable interest rates. A private loan can have a lower rate as well, but they may fluctuate.Federal loans offer the possibility of a subsidized loan, where the government can pay interest while you are in school.Federal loans also can potentially qualify for loan forgiveness programs (more on this later).If you do choose to use private loans, be certain to do your research on each lender before borrowing.

Some private lenders will give you more options than others. Make use of resources like your school’s financial aid office, online information, and other sources to guide your riverside

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