Education is an expensive investment in your future, so sometimes, student loans are necessary to make financing it possible. Student loans are considered part of a student’s entire financial aid package, but they differ from grants and scholarships primarily because they must be paid back.

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The first place to look for student loans is through the federal government. Federal student loans may be subsidized; the government pays off all interest accrued while the student is in school. The other type of Federal student loan is unsubsidized; the student is responsible for all interest. Subsidized Federal student loans are the least expensive way to finance your education because, upon graduation, you are only responsible for the initial amount borrowed.

The type of student loan you qualify for through the federal government is based on your financial need. To determine financial need and become eligible for any federal student loans, you must fill out the Free Application for Federal Student Aid (FAFSA) .

The government calculates your expected family contribution (EFC) and then offers you an aid package based on your remaining financial need. Some student will qualify for subsidized loans and many more will qualify for unsubsidized loans.

Private student loans

When federal student loans are not enough to cover all of the costs of education such as books, housing, lab fees, and so on, many students must borrow additional funds from private lenders.

Private student loans tend to have slightly higher interest rates (though they are still very reasonable). However, you can often borrow a much higher loan amount through a private lender. So, a private student loan can be a bit more costly than its federal counterpart, but it is certainly an effective way to finance your education investment if Federal loans will not cover the cost of your education.