Educational loans are available from a variety of sources, allowing students and/or parents to borrow funds that can pay for some or all college costs. If a student decides to fund part of their education with an educational loan, it is important they understand who is making the loan (the loaner), whose name the loan is in (the borrower), and the terms and conditions of the loan.
Educational loans may come from the federal government or from private sources such as a bank or financial institutional. Federal student loans are often considered the "best" loans, usually offering borrowers lower interest rates and more flexible repayment options than loans from banks or other private institutions.
It is important to remember that loans must be repaid, with interest, usually after graduation. First time borrowers will also need to complete the necessary promissory notes and entrance counseling for loans. Educational loans can be categorized as:
We encourage you and your family to be responsible borrowers if you decide to take out a loan to help cover the costs of your education at Illinois College. Below are some key things to consider regarding student loans:
- Borrow only the funds you need. We will include your full loan eligibility on your financial aid award, but you are not required to borrow the full amount.
- If you decide to limit how much you borrow and wish to decline or reduce some of your offered loans, consider in most cases, the most appealing loan is the Federal Direct Subsidized Loan, following by the Unsubsidized Loan.
- You are encouraged to make payments toward your federal loans while you are in school. There isn’t a penalty for doing so and will reduce your overall debt upon graduation.
- Keep copies of all loan documents in a well-marked folder.
- Wise management of your loan will help you establish a strong credit history. When it comes time for repayment, consider setting up an automatic debit from your checking or savings account. Many servicers, including the U.S. Department of Education will reduce your interest rate if you do so.