Furthering your education is another way to build wealth. Are you looking to start college or return to school, but it seems like college is just way too expensive? Let’s face it, finances can be a barrier of access to education.

As always, MoCaFi has your back! We want to help you break down those barriers to find student loan options that work best for you and reduce the amount of debt you leave college with. It’s okay if you or your family do not have a college savings account to help you reduce the college debt. Below we highlighted the different versions of loans available.

Federal Student Loans

Federal student loans generally have low fixed interest rates, which is great for when you repay your loans after you graduate and makes this type of loan a highly recommended option. Additionally, there are opportunities for deferment which means you don’t have to worry about repaying your loans during college.

Direct Subsidized loans and Direct Unsubsidized loans are categorized under federal student loans Below is a chart that identifies the main differences between the federal loans, according to the Federal Student Aid office:

Direct Subsidized Loans

  • Available to undergraduate degree seekers only
  • Have to demonstrate financial need
  • Reduced or no interest rate since the U.S. Department of Education covers the interest rate while you are in school, during the 6 month grace period, and deferment

Direct Unsubsidized Loans

  • Available to Undergraduates, Graduates, and Professional degree seekers
  • No requirement to demonstrate financial need
  • Your interest rate will add up and you are responsible for paying interest while you are in school, during the 6 month grace period, and deferment

To apply for federal student loans, you need to complete the Free Application for Federal Student Aid (FAFSA®) form every year you’re in school. Completing and submitting the FAFSA form is free. The fastest and easiest way to do so is online at fafsa.gov.

Private Loans

Private loans are not as ideal, but they are an available alternative option. The reason why private loans are not necessarily the best option is because they tend to have higher interest rates. These interest rates may also be required to be paid off while you are in school.

Checklist Questions to Ask Yourself Before Take Out A Loan

Wondering how much to borrow? You can use the checklist below to figure out how to budget your expenses and identify how much you need.

  • How much is the cost of living where you plan to attend school?
  • (The cost of living is different depending on the city your school is in)
  • How much do you plan to spend on groceries or will you use the meal plan?
  • How much is the price of the school you plan to attend?
  • (The more expensive the school, the more likely it is you will have to borrow)
  • How much is the amount of financial aid your school offers you?
  • How much do you need for books and school supplies?
  • How much would it cost to participate in student activities?

Hope this gives you some insight on how to manage student loans properly.