If grants, scholarships, and savings are not enough to cover college costs, then it's time to consider student loans. Students and parents can find education loans available from the federal government and private institutions. When taking out a student loan be sure to know who the provider is and understand the terms and conditions of the loan.
Be a responsible borrower. Loans always require repayment, so never borrow more than is needed or can be reasonably repaid. Consider the salary of your desired career and your future budget to help estimate how much you’ll be able to afford to repay.
Federal Student Loans
Federal student and parent loans are funded by the Federal Student Aid (part of the U.S. Department of Education). Generally, federal loans offer more repayment options and are less expensive than private loans. Start there.
Four different types of Federal Direct Student Loans are available.
- Direct Subsidized Loans - these are for eligible undergraduate students who demonstrate a financial need to help cover their college costs.
- Direct Unsubsidized Loans - these are for eligible undergraduate, graduate and professional students. Financial need does not affect eligibility for this loan.
- Direct PLUS Loans - these are for graduate students, professional students and parents of undergraduate students. Eligibility is not based on the financial need of the borrower for this loan but a credit check is required.
- Direct Consolidation Loans - these loans allow a student loan holder to combine all their student loans into a single consolidated loan with a single service provider.
To apply for Federal Direct Loans simply fill out the FAFSA form. Based on those results, your college will send you a financial aid offer which may include a federal direct loan. If you accept the loan, there are requirements to meet in order to receive those funds.
- Entrance Counseling - an online entrance counseling session must be completed. This session is usually completed in 20-30 minutes.
- Master Promissory Note - this is a legal document stating the terms and conditions of the loan. It is also a promise to repay the loan and any fees and interest it accrues.
State Forgivable Loan Programs
Forgivable Education Loans for Service (FELS)
The Forgivable Education Loans for Service Program provides financial assistance, in the form of forgivable loans, to assist qualified students who are committed to working in North Carolina in designated critical employment shortage professions, including education, allied health, nursing, and medicine.
North Carolina Transforming Principal Preparation Program
The North Carolina Transforming Principal Preparation Program provides financial assistance, in the form of forgivable loans, to qualified students who plan to enroll in a master’s program of school administration and serve as a principal, assistant principal, or other approved school leader position in a North Carolina public school.
North Carolina Teaching Fellows Program
The North Carolina Teaching Fellows Program is a competitive, merit-based program that provides financial assistance, in the form of forgivable loans, to highly qualified students committed to teaching special education or a STEM (Science, Technology, Engineering or Mathematics) field in a North Carolina public school.
Private Student Loans
Because private student loans are not provided by the federal government their terms and conditions are set by the specific lender. Generally, they tend to be more expensive than federal loans and do not include as many flexible repayment options.
College Foundation, Inc. proudly offers the NC Student Assist Loan and the NC Parent Assist Loan. These loans help bridge the gap between the cost of education and other financial aid. The loans are zero-fee, fixed-rate loans. NC Student Assist Loans do not require payment for up to 6 months after leaving school. The NC Parent Assist Loan and the NC Student Assist Loan interest rates are very competitive and in some cases lower than the Federal Direct Loans. Compare the rates.
Before borrowing any private student loan, be sure to understand the following:
- Is the interest rate fixed or variable?
- When do you have to begin repayment?
- Do you need a co-signer (another person who agrees to be legally responsible for repaying your loan if you do not)?
- Can you reasonably repay this with your future salary and budget?
- What repayment options does this lender offer?