How do student loans work (US)?

Student loans work by providing funds to cover the cost of higher education expenses, such as tuition, room and board, textbooks, and other related expenses. The loans can be obtained through federal or private lenders, and repayment typically begins after the student has graduated or left school.

Here are the basic steps of how student loans work:

1. Applying for a loan: Students can apply for federal student loans by completing the Free Application for Federal Student Aid (FAFSA). Private student loans typically require a credit check and may also require a cosigner.

2. Loan disbursement: Once a loan has been approved, the funds are typically disbursed directly to the school to cover tuition and other expenses. Any remaining funds are typically refunded to the student to use for other schoolrelated expenses.

3. Interest accrual: Interest begins accruing on the loan as soon as the funds are disbursed, and continues to accumulate throughout the life of the loan. The interest rate can vary depending on the type of loan and the lender.

4. Repayment: Repayment of the loan typically begins after the student has graduated or left school, although there may be a grace period before payments are due. Repayment can be made over a period of several years, with monthly payments that include both principal and interest.

5. Loan forgiveness: In some cases, federal student loans may be eligible for forgiveness, cancellation, or discharge if certain criteria are met. For example, Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on eligible federal student loans after the borrower has made 120 qualifying monthly payments while working fulltime in a qualifying public service job.

It's important to carefully consider the terms and conditions of any student loan before accepting it, and to have a plan in place for repaying the loan after graduation.