For most students, a college education does not come cheap, and it is only a dream after all. Irrespective of your chosen field of study- be it medicine, engineering, business, or art- the tuition fee, money for books, and living costs can be daunting to many students. Loans are a simple solution to this chronic financial problem.

What Are Student Loans?

Student loans are a sum of money borrowed for educational use, which is then paid back with interest. Scholarships and grants, unlike loans, do not need to be returned; nevertheless, the money spent is often inadequate and the given time frame scanned, thus additional cost may arise. The government, banks, and schools can be their suppliers.

Types of Student Loans

1. Federal Student Loans – These loans are secure and supported by the government. One generally gets the chance to take them with a lower interest rate, get the facility of rejoinder, and also get the benefits of the borrower's security. Here are some examples:

• Direct Subsidized Loans – This federal loan is intended for the students who really require it, and no interest is charged on the loan amount until finally the students have graduated after using it for their education. The interest rate is paid by the government.
• Direct Unsubsidized Loans – A federal loan is one which is paid to all students who apply for it. In this case, the interest will be accumulating as from the day the money will be taken.
• PLUS Loans – Available to parents with a credit score; also, if the parent is not a borrower, available to parents/caregivers of LLP students.

2. Private Student Loans – These loans are available from the participating banks, credit unions, and other private lenders. The terms and interest rate applied depend on the borrower's credit score and history, among other factors.

Pros and Cons of Student Loans

Pros:

• It gives students a chance to get a college education even if the family could not afford it.
• Federal loans are characterized by fixed interest rates and income-driven repayment plans.
• There are some options to get loan forgiveness for public service workers and teachers.

Cons:

• Accrual of interest over time may cause you to experience high re-payment costs.
• Not paying loans back can wreak havoc with the credit rating.
• Private loans may have high interest rates and few borrower protections.

Tips for Managing Student Loans

• Just borrow as much money as you are sure you really need – Overspending avoided by prudently budgeting.
• Know your options, and then make your choice – The US Department of Education offers several repayment plans that include repayments based on your income.
• Even paying small amounts on the interest of a loan while still in school can hike the costs considerably.
• Consider signing up for one of the programs that pardon student loans – You can get a loan forgiveness option in public service if you work there.
• Consolidate your loans – Think about refinancing student loans to get lower interest rates or merging many loans into one to  facilitate handling them.

Although student loans can be very instrumental in getting an education, there are serious conflicts that the student needs to prepare for and the student loan program may not be the best method to finance the college education. Before borrowing, explore all available financial aid options, understand the terms of your loans, and have a clear repayment strategy in place. With the right approach, student loans can help you achieve your academic and career goals without overwhelming financial stress.