Paying for your studies can be a big responsibility. Understanding the difference between a federal and a private loan and your debt consolidation and repayment options can save you thousands of dollars.
Some companies promise to help you reduce your student loan debt, but everything they can do, you can do for yourself for free. And some of the companies that promise to ease your student loan debt are scams. It is illegal for a company to charge you before helping you.
How to finance your education
- Payment and forgiveness of loan debt
- Loan consolidation
- Signs of fraud in student loan debt relief offerings
- Report fraud
How to finance your education
There are several types of help available to pay for your education after high school, including grants and scholarships, federal work-study jobs, and student loans. The first step is to complete the Free Application for Federal Student Aid (FAFSA) form at fafsa.gov.
Grants and scholarships
Grants and scholarships are free money. They should be your first option to finance your education. Why? Because you should not pay them. A good way to apply for a grant is through the FAFSA form. You can also explore these other resources to find out about scholarship and grant opportunities:
- the financial aid office at a university or vocational school
a high school or TRIO counselor
- the free scholarship search tool from the US Department of Labor
- federal agencies
- your state
- your library foundations, religious or community
- organizations, local companies or civic groups organizations related to your field of interest, such as professional
- associations ethnicity-based organizations
- your employer or your parents’ employers Federal Work-Study Jobs
Federal work-study jobs are another way to help pay for college. This type of employment is a needs-based allowance, which requires you to work part-time while studying. To qualify for a work-study job, you must complete the FASFA form and meet the program’s “needs-based” criteria. You will only be paid for the hours you work.
Student loans fall into two categories: federal loans and private loans.
Federal loans include:
Direct loans, where the US Department of Education. USA is the lender;
Federal Family Education Loans (FFEL), where private lenders make loans backed by the federal government;
Federal Perkins Loans, low-interest federal student loans for undergraduate and graduate students with exceptional financial needs; and
PLUS loans, federal loans that can be used by graduate or professional students and the parents of dependent undergraduates to help pay for college or vocational school.
Private loans sometimes called “alternative loans,” are offered by private lenders, such as banks and savings cooperatives, and do not include the benefits and protections offered by federal loans.
FAFSA is an acronym for Free Application for Federal Student Aid. It is the only way to apply for federal student aid. The application is free. You must complete the FAFSA form at fafsa.gov each year you are in college or vocational school.
In addition, many states use the data from your FAFSA to determine your eligibility for state aid or for the university itself. Some private financial aid providers use information from the FAFSA to determine if you are eligible for your aid options.
Complete the FAFSA form for free at fafsa.gov.
FSA ID: When you complete your FASFA, you will also create an FSA ID. FSA ID stands for Federal Student Aid Identification. It is a username and password that you create. You use your FSA ID to:
Enter the Federal Student Aid system.
complete the FAFSA form. legally sign your student aid documents.
Only you can create and use your FSA ID. Do not share your FSA ID with anyone else. Dishonest people can use your FSA ID to log into your account and take control of your personal information.