6 Things You Should Know About Student Loans

What's up, future scholars!

Let’s face it—student loans can feel like that one complicated game where no one bothers to read the instructions. But don’t sweat it—we’ve got your back. Whether you’re starting to apply for college, filling out financial aid forms, or just wondering if student loans are the right move for you, we’re here to break it down in a way that actually makes sense—no boring lecture vibes, we promise! Getting the basics down now can save you a ton of headaches later.

here's a quick breakdown of what to know

1. how do student loans work

Student loans are borrowed money to pay for college—but it’s not free money. You’ll need to pay it back, plus interest.

There are two main types of loans:

• Federal Student loans:  A type of loan that's funded by the government and usually offer lower interest rates and flexible repayment options, making them the go-to choice for most students. Common types include:
  • Stafford Loans: A broad category that includes both subsidized and unsubsidized loans, often the backbone of federal student aid.
  • Parent Plus Loans: For parents helping their child pay for school.
  • Graduate Plus Loans: For graduate students needing extra funds. 
  • Perking Loans:   A need-based loan, though it’s no longer offered to new borrowers.
• Private Student loans: Another type of loan but are offered by banks, credit unions, or online lenders. They may have higher interest rates and fewer repayment options than federal loans, but they can help cover costs if you’ve maxed out federal aid.

understanding student loans

To get started with student loans, you’ll need to apply—federal loans require completing the FAFSA (Free Application for Federal Student Aid), while private loans are handled through individual lenders like banks or credit unions. Once approved, the funds are sent directly to your school to cover tuition and fees.

If there’s any money left over, it’s sent to you to use for other school-related expenses, such as housing, textbooks, or supplies. After you graduate—or if you drop below half-time enrollment—you typically have a six-month grace period before you need to start making payments. This gives you time to get on your feet and prepare for repayment.

2. look for free money before borrowing

Scholarships and grants are like golden tickets—they’re free money for college that you don’t have to pay back. Think of them as discounts on your education. Why take out loans if you can lower the price tag upfront? You wouldn’t skip a big sale, right?

Here’s how to get started:

• Search locally: Many North Carolina colleges and universities have dedicated pages for scholarship opportunities. Check out sites like CFNC (College Foundation of North Carolina) or your school’s financial aid office for state-specific scholarships.
• Apply broadly: Don’t limit yourself to one or two applications. The more scholarships you apply for, the better your chances. Psst...Tailor your essays to stand out.
• Look for unique opportunities: Some scholarships reward more than academics—think community service, sports, or even quirky talents.

Keep in mind - every dollar you win in scholarships is one less dollar you’ll need to borrow. Start early, stay organized, and don’t shy away from small scholarships—they add up!

Psst... Here are more scholarships with upcoming deadlines in 2025. Check it out!>

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3. know your student loan terms

Loan terms can feel like a foreign language but they’re easier to understand than you think. Here’s a quick guide to the key terms you need to know:

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Think of these terms as tools in your financial toolbox. Knowing how they work helps you make smarter decisions and stay in control of your loans. If anything seems unclear, ask questions. Your future self will thank you!

4. know your borrowing amount

When it comes to student loans, less is more. Borrow only what you truly need to cover essential school expenses like tuition, books, and housing—not extras like fancy coffee, new clothes, or a spring break trip. It’s easy to overborrow when loans feel like “free money,” but remember—you’re borrowing from your future self, and they’ll have to pay it back (with interest).

To ensure you're borrowing smart:
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5. know your options for paying loans back?

When it’s time to start repaying your student loans, you’ll have options—especially with federal loans. Finding the right repayment plan for your budget can make all the difference. Here’s a quick look at a few popular options:

• Standard repayment: This is the default plan for federal loans. You’ll pay a fixed amount each month over 10 years. Example: If you borrow $30,000 at a 4% interest rate, your monthly payment will be around $300. It’s a great option if you can afford it, as you’ll pay less interest overall.
• Income-driven repayment: Plans like Income-Based Repayment (IBR) adjust your monthly payments based on your income and family size. For example, if you’re earning a lower salary right out of college, your monthly payment could be as little as $100. After 20-25 years, any remaining balance might be forgiven (though you could owe taxes on the forgiven amount).
• Extended repayment: If a 10-year plan feels too tight, this option spreads payments over 20-25 years, reducing your monthly bill. Just keep in mind, you’ll pay more in interest over time.

Set up automatic payments to avoid missed deadlines—some lenders even offer an interest rate discount for doing this. And if you’re ever struggling, contact your loan servicer right away to explore options like deferment or forbearance. Ignoring your loans won’t make them go away!

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6. plan your student loan repayment timeline

Student loans might feel like a lifetime commitment, but they don’t have to be! With smart planning and repayment strategies, you can tackle your loans faster and with less stress.

Here’s how to manage your timeline:

• Stick to your plan: For example, if you’re on a 10-year standard repayment plan, stay consistent with your payments to finish on time.
• Pay more than the minimum: Even an extra $50 a month can chip away at your balance faster. For instance, paying $350 instead of $300 on a $30,000 loan could save you a year of payments and hundreds in interest.
• Look into loan forgiveness: Federal programs like Public Service Loan Forgiveness (PSLF) can erase your remaining balance after 10 years if you work in a qualifying job (like teaching or government work).

Make loan repayment part of your budget, like a subscription you can’t cancel until it’s paid off. And remember, student loans are just one chapter in your journey—not the whole story. With patience and determination, you’ll conquer them!

Ready to tackle your debt head-on, even those student loans? Check out our article designed to help you take control of your repayment strategy!

what's next?

By tackling these six steps, you’re already setting yourself up for success. Remember, student loans aren’t a burden—they’re a stepping stone toward achieving your goals. Stay curious, ask questions, and make choices that align with your future dreams. You’ve got this!

As always, if you have any questions or comments, our Customer Service Representatives are here for you. You can send an email or give us a call at 704.375.0183.