Top 10 Student Loan Questions and Answers

Read on for answers to 10 of the most frequently asked student loan questions.

Student loans can provide an excellent way to cover the cost of your college education. But whether you're a student or a parent, you may have a lot of questions about how student loans work and how to obtain them. 

Here are 10 of the most frequently asked private and federal student loan questions to help you build a foundation to make better financial decisions when it comes to paying for college.


1. How do I get student loans?

Depending on the type of student loans you choose, there are a couple of ways you can get them.

With federal student loans, for instance, you may qualify simply by filling out the Free Application for Federal Student Aid. With the information from your application, your school's financial aid office will determine your eligibility for a number of financial aid options, including scholarships, grants, work-study programs and student loans.

If you're applying for private student loans, you'll apply directly with the lender via its website. It's best to shop around and compare multiple lenders before you submit an application so you can ensure that you get the best deal.

2. What is the difference between federal and private student loans?

Both federal and private student loans can help you pay for school, but there are quite a few differences between the two loan types to understand before you choose one. For starters, federal loans are provided by the U.S. Department of Education, while private loans come from private lenders such as banks, credit unions and online lenders.

Other differences include:

  • Most federal loans don't require a credit check when you apply, while all private loans do.
  • Federal loan interest rates are standardized, so everyone who qualifies gets the same rate for that school year. Private loan rates vary based on your creditworthiness.
  • Federal loans offer benefits such as access to income-driven repayment plans and loan forgiveness programs. Private loans don't offer the same.

For most college students, particularly undergraduates, it's best to start with federal student loans. If you still need money after that, consider Juno's undergraduate loans or graduate loans to get help negotiating the lowest rates possible.

3. What can I use my student loans for?

The federal government is explicit about which expenses are eligible for student loan funds. According to the Office of Federal Student Aid, those expenses include:

  • Tuition and fees.
  • Room and board.
  • Textbooks.
  • Equipment and supplies necessary for study.
  • A computer.
  • Transportation to and from school.
  • Child care expenses.

For other expenses, look for other income sources to help you cover your costs.



4. How does student loan interest work?

While you generally won't be required to make payments on your student loans until after you've left school, student loan interest accrues from the date of your loan disbursement. If you have subsidized federal loans, the government pays your accrued interest while you're in school as well as during the six-month grace period after you leave and future deferment periods.

However, if you have unsubsidized federal loans or private loans, any interest that's not paid off will be capitalized and added to your loan balance, which can increase your costs. As a result, consider making interest-only payments while you're in school.

5. What is the grace period on student loans?

Most federal and private student loans offer a six-month grace period after you graduate from college, fall below half-time enrollment or drop out altogether. During this time, you don't have to make payments on your student loans, though interest will continue to accrue.

6. How do I repay my student loans?

Once your grace period is up, you'll need to start making monthly payments directly to your loan servicer or lender. It's best to set up automatic payments through your online account to ensure that you don't forget. Many servicers and lenders even offer interest rate discounts to borrowers who are on autopay.

You typically can choose to make the standard monthly payment or add extra cash to your payments to pay down your student loans more quickly.

7. What if I can't afford my payments?

If you have federal student loans, you may be able to get on an income-driven repayment plan. These plans reduce your monthly payments to 10% to 20% of your discretionary income and also extend your repayment term to 20 or 25 years. If you have a remaining balance at the end of the term, it'll be forgiven.

You can also request forbearance or deferment if you're experiencing significant financial hardship.

If you have private student loans, contact your lender and ask about forbearance options or even a modified payment plan. You may also consider refinancing your student loans with a longer repayment term or lower interest rate to decrease your payment.

8. Can I pay off my student loans early?

Yes. Student loans don't have a prepayment penalty, so you can pay them off as quickly as you want. You can do that by adding extra money to your monthly payments, making large payments when you receive small windfalls, such as a work bonus or tax refund, or refinancing your student loans with a shorter repayment period.


9. How do I get the best student loan interest rates?

If you're an undergraduate student, your best bet may be to apply for federal loans. But if you're a graduate student or parent or if federal loans aren't enough to cover all of your expenses, here are some steps you can take to secure a low rate:

  • Work with Juno to get help negotiating to secure exclusive rates and discounts.
  • Shop around and compare rates from multiple lenders.
  • Apply with a creditworthy co-signer.
  • Work on establishing a good credit score.

Take your time with this process, and it can save you hundreds or even thousands of dollars.

10. What are the benefits of refinancing student loans?

In the right situation, refinancing your student loans can provide several benefits, including lower interest rates, reduced monthly payments and more flexibility with monthly payments. When you refinance with Juno, you can maximize your savings because Juno works on behalf of borrowers to help secure the lowest rates available based on your eligibility.

You can also improve your chances of benefiting from refinancing by applying with a co-signer. Keep in mind, though, that if you refinance federal loans, you'll lose access to the benefits those loans offer.


Ben Luthi
Written By
Ben Luthi

Ben Luthi is a personal finance and travel writer based in Salt Lake City, UT. He loves helping people better understand their finances. When he's not traveling, Ben enjoys spending time with his kids, hiking, and watching films. His work has been featured in U.S. News & World Report, The New York Times, MarketWatch, Fox Business, and many other publications.

All Categories: