When it comes to college education, most students are incapable of covering the costs therein on their own and hence require financial assistance. Scholarships and grants are the most preferred form of financial support since they do not seek repayment.

However, not all students get scholarships and grants. Even those who do might find the funds inadequate to sustain them throughout their college education. This scenario is what necessitates taking student loans.

In order to have as many students as possible to join colleges, two types of educational loans are accessible:

  1. Private Loans
  2. Federal loans

Federal loans are the most preferred due to their advantages over private loans.

Let us look a bit more into each of these loans.

Federal Loans

These loans are provided by the national government to enable college students to pay their fees.

The interest rates here are fixed and lower, with favorable payment terms and conditions compared to private loans.

They are further divided into two major programs; the Direct Loan Program and the Perkins Loan.

The Direct Loan Program offers funds to parents of college students through the Federal Student Aid Office.

The Perkins Loan has a 5% interest rate and is given to learners with notable financial needs through their schools.

Private Loans

These are educational loans by banks and other private lenders.

It is advisable that students apply for these loans as a last resort. This is because, apart from the high interest rates, these nation 21 loans may require a cosigner and a solid credit record.

Any loan, whether Federal or private, is a serious undertaking and therefore the savvy student should always consider the benefits of the loan them before opting for it.

Here are some of the benefits that one gets from taking a students’ loan.

  1. They Enable You to Afford College

Minus financial aid from student loans, millions of students will be unable to pay for their college education.

According to research done by the College Board, the average estimated full-time undergraduate budget for the 2018-2019 academic year is $25,890 for public in-state colleges while the figure in private colleges stands at $52,500.

Photo courtesy of the College Board

The above figures, mark you, represent just one academic year. For four years, the average cost of college attendance will be $103,560 and $210,000 for public in-state and private colleges respectively.

Very few families are able to raise these figures in order to enable their children to attend college. Nevertheless, taking out loans for college has enabled a ton of students to attain their college dream.

  1. Empowers You to Attend Your Dream College

While still in high school, most learners will have already made up their mind on which college they will want to attend. What if you are unable to raise the cost of attendance for your dream college?

Let’s have an example.

John’s parents are diligent citizens who know the value of college education and have, therefore, over the years, saved enough money for their son to join a public in-state college. However, John has a dream to study at Yale, a private college, whose cost of attendance is almost double what John’s parents have managed to save.

Without any scholarships or grants, John will be unable to go to his dream college, but not if he can successfully apply for a Federal or private college loan.

Taking out a college loan, therefore, will not only enable you to join a college, but it can also be the difference between settling for that “average” college and going to your dream college.

  1. Taking Out College Loans Helps Build Credit

For many students, taking out loans for college is considered a risky affair for fear of defaulting payment. While it is true that paying back the loan can be frustrating, it is equally true that these loans, if repaid in time, will help build your credit.

Student loans impact on your credit, either positively or negatively depending on your repayment.

Here are two ways on how taking out a college loan can help build a solid credit history.

  1. Timely payment boosts your credit score; how you repay your loan will have a 35% influence on your credit score. If you are able to pay at least the minimum payment due every month, it will work to your advantage and boost your score.
  2. Gives you a long credit history; college loans usually have a longer repayment period which will work to your advantage as a long credit history will also positively impact your credit score. However, if you can repay your loan faster, do it.


As a student, your options for building a solid credit score are usually limited, especially since you might not have a source of income. Making timely payment of your loans over a long duration is the best foundation you have towards having an established credit score.


  1. Flexible Repayment Options

Unlike regular loans, student loans have flexible repayment options. Even though both loans strive to provide the most favorable terms, federal loans have the best repayment terms.

These options include;

  • You can pay for your loans after graduation. This also extends half a year after graduation.
  • You can apply for a deferment and therefore not pay for a certain period of time without negatively affecting your credit score.
  • Delinquency for Federal loans is not reported until it exceeds 3 months past the due date while that of private lenders can give a grace period of up to 45 days past the due date.
  • Federal loans are at times forgiven, canceled or discharged, meaning repaying the loan will not be necessary. This may be due to the kind of job you do, or permanent ailment.


Bottom Line

Taking student loans to fund your college education should no longer scare you. After all, these loans have flexible repayment options which, when you plan well enough, should not pose any challenge repaying.


Look at these loans as an investment in your future rather than a debt burden.


In as much as taking these loans will work in your favor, do not let the flexible payment options entice you into borrowing more than what you can repay. Remember, failure to make timely payments will adversely impact your credit score.


Before putting pen to paper, determine the necessary amount you need. Strive to make an informed decision as to which course you’re taking. This way, this will all be worth it.


Finally, having determined the gains, you can proceed with signing up for the loan, join college, and share in the American Dream.

Sam Yoon has many years of experiences in journalism. He has covered such areas as information technology, science, sports and politics. Yoon can be reached at 82-2-6956-6698.