Student loans can become complicated very quickly. Even if you already have student loans, you might not completely realize what kind of loans you have. When it is time to pay for these loans or sign up for more, you may be left with more questions than answers.

As you will see, there are different types of programs for students getting loans. Understanding the types of loans, including the lenders who offer them, can change your understanding of these loans.

There are two main types of loans to consider: federal and private loans. Here's what you should know before you apply for college financial aid.

Federal Loans

First, you should develop an understanding of federal loans, which offer a variety of advantages, including a fixed interest rate. Federal loans are often much more affordable than private loans in the long run.

The first major advantage of federal student loans is that most people will qualify. You do not need a cosigner, and you will not have to undergo a credit check. Additionally, you do not have to start making payments until after you leave school on a full-time basis.

After you finish school and begin paying your loans, you will also see that there are different ways to repay your loans. For example, federal loans will allow you to make payments based on your income, allowing you to pay smaller amounts for a longer period of time.

Private Loans

Private loans often come from private banks and credit unions. They may even come from the colleges themselves. Often, this is the best choice for students who meet their federal loan maximum and need some supplemental assistance paying for school.

Private loans offer higher borrowing limits, which makes them a desirable option. If you are attending graduate school, for instance, you may find that you have capped out on the federal loans you are allowed to take out. Private loans may be more accommodating.

Additionally, private loans do not come with the same options to seize tax refunds or garnish wages that federal loans come with. This means that you are not at higher risk of losing wages in the future if you are unable to pay for your loans.

Which Option Is Right For You?

If you have questions about student loans, now is a great time to reach out to a financial aid professional who understands the benefits of these different types of loans. You may also learn about additional financial aid options. 

For more info about college financial aid assistance, contact a local company.