What should I know about federal student loans?
A loan is money you borrow and must pay back with interest. If you plan to take out a federal student loan, talk to your college's financial aid office to find out how to apply. These loans have different rules than private loans, like those from banks, credit unions, or schools.
As with any loan, know the interest rates, repayment terms, and tax effects. Taking out a loan is a big step, and the school you plan to attend cannot require you to do so, even though they may add loan information to the student aid package they send you.
Here are a few things to check on about any student loan:
- Interest charges are variable or fixed.
- The loan has forgiveness or deferment provisions.
- You can merge the loan with other loans.
- The loan carries prepayment penalties.
Borrow only what you need.
Remember that you have to repay a loan, even if you do not finish college. A failure to repay the loan can hurt your credit rating and result in legal action against you. It can also prohibit you from qualifying for federal financial aid in the future.
If you receive a federal student loan, you must repay it with interest per the terms of your loan agreement. Before signing, read and understand all conditions about federal aid, grants, and loans.
Learn more about federal student loans and their binding terms on the USDE website.
More resources
The Connecticut Higher Education Supplemental Loan Authority (CHESLA) can help you with the refinancing process.