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2.5. Loans

Loans are borrowed funds that must be repaid, usually with interest. Federal student loans, such as Direct Subsidized or Unsubsidized Loans, often have lower interest rates and flexible repayment terms compared to private loans from banks or credit unions. While loans can be a valuable tool, they require careful consideration since they impact your finances long after graduation.

Student loans are borrowed funds that must be repaid, usually with interest. They can come from government programs or private lenders.

Types of Student Loans:

• Federal Student Loans: These loans are offered by the government and often have lower interest rates and flexible repayment options. Examples include Direct Subsidized and Unsubsidized Loans in the U.S.

• Private Student Loans: Provided by banks or financial institutions, these loans may have higher interest rates and fewer protections.

• Parent Loans: Some programs allow parents to borrow on behalf of their children, such as the Parent PLUS Loan in the U.S.

Key Considerations:

• Interest rates and repayment terms vary.

• Loan forgiveness programs are available in some cases (e.g., public service loan forgiveness).

• Defaulting on loans can negatively affect credit scores