student debt / student loans

What to know before you take out a student loan

This great resource from the American Institute of Certified Public Accountants is must reading for students and their parents. Quoting directly from the article by James Sowell and Melissa Towell in the Journal of Accountancy:

  • There are two types of student loans. Federal student loans (FSLs) are issued directly to students by the federal government. Private student loans are issued by banks or other financial institutions.
  • FSL interest rates are either subsidized or unsubsidized. Subsidized FSLs do not accrue interest while the student is in school. Unsubsidized FSLs accrue interest while the student remains in school. 
  • FSLs and private loans have different repayment terms. The repayment terms for FSLs are more flexible and offer relief if needed. Private student loan terms are set by the lender and offer little flexibility or relief if the student has trouble repaying the loan.

FSLs are based on a student’s financial need, not on the borrower’s (or parents’) credit rating.
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Source: Financial Planning for Women