Federal student loans don’t allow co-signers, and only federal PLUS loans require a credit check. Other federal student loan borrower protections not typically offered by private lenders include: • Repayment plans that cap monthly bills at a certain percentage of your income, such as the new SAVE repayment plan. SAVE can forgive smaller amounts of debt in only 10 years, and give borrowers $0 bills if they earn a lower income. • Extended payment pauses, like a student loan deferment or forbearance, for financial hardships. (Private loan forbearances are generally shorter and more difficult to qualify for.)
• Loan forgiveness programs, like Public Service Loan Forgiveness.
• Loan discharges for borrowers whose school closed or defrauded them.
As a general guideline, borrowers should prioritize federal student loans. If they still have remaining costs, private student loans are a good option to fill in the gaps.
Submit the FAFSA to minimize borrowing Minimize your total college debt and interest payments by leaning on funding sources you won’t have to repay, like scholarships, grants and work-study. You must submit the FAFSA for each year you’ll be in school to qualify for most grants and work- study. That includes the federal need-based Pell Grant, which can give you up to $7,395 per year in free money to pay for college. Many scholarships require applicants to submit the FAFSA. You also need to submit the form to be eligible for federal student loans. The new, redesigned FAFSA is open until June 30, 2025, for the 2024-25 school year, but you should fill it out as soon as possible to increase your chances of getting more money — some types of aid draw from limited pools and can run out.
The article Federal Student Loan Interest Rates Will Hit Some Record Highs was written for NerdWallet on July, 2024.
ELIZA HAVERSTOCK is a writer at NerdWallet.
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