Student Loan Basics
Before jumping into a student loan, make sure you understand all the ways to pay for college and how loans work. Learn about all your options below.
Scholarships are financial rewards based on need or merit that do not need to be paid back in the future. There are many NC scholarships available, and applying to a wide range of scholarship opportunities can help make college more affordable.
- Grants and Need-Based Scholarships
Like scholarships, grants are also considered “gift aid” and do not need to be paid back. Sometimes you will see the terms “grants” and “need-based scholarships" used interchangeably. Federal and State education grants are the most common, but some colleges and universities provide their own grant programs. Almost all grants require you to fill out the FAFSA. Don’t miss out on free money!
Paying for college with pre-existing savings can help you avoid the need to pay interest on borrowed funds. One of the best ways to prepare for college costs is by investing with a 529 savings account.
- Federal Direct student loans
Federal Direct student loans are provided by the federal government. These include direct subsidized loans, direct unsubsidized loans, direct PLUS loans. Many borrowers apply for multiple different types of loans to cover the cost of college. Student borrowers should max out all Federal Direct subsidized loans before considering any other types of loan.
- Private student loans
Private student loans are provided by non-government entities. While these loans have varying interest rates, they can help you bridge the funding gap that remains after exhausting other financial aid.