Understanding student loans

By Scott Glasgow - This lesson will explain the differences between different federal and private loans

Types of federal loans

There are three main types of federal student loans: Direct subsidized, direct unsubsidized, and direct plus.

Direct subsidized

The federal government pays the interest for direct subsidized loans while the student is in college or while the loan is in deferment.

Direct unsubsidized loans

Interest begins accruing for direct unsibsidized loans as soon as the loan is taken out.

Direct plus loans

Similar to unsubsidized loans; however, offered to graduate and professional students along with parents of dependent undergraduates.


It’s up to you to decide how much debt you are willing to take on. Just keep in mind that student loan debt is non-defaultable in bankruptcy and will be stuck with you until it's paid off.

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