Student loans – whether federal, parent, or private – have their own set of pros and cons. That’s why it’s important to choose carefully to avoid acquiring bad debts. To guide you in making that decision, here’s some basic information about student loans that you can use.

Sources for student loans are not difficult to find. In fact, both the government and private sectors offer education loans (and grants, too). But not to forget, these are only borrowed money-you have to pay for them eventually. So, always be responsible and decide properly before getting any loan.

Low rate student loans are real big help. Since they offer lower interest, students can pay lesser amounts at shorter time period, which can mean more savings. Plus, if a student qualifies, the government could even shoulder the interest while he/she is at school, and up to nine months after graduation.

A federal student loan is a form of low-interest financial aid that’s guaranteed by the U.S. Department of Education. Since it’s a need-based program, credit history (good or bad) has no bearing on whether you’ll qualify for it or not. Loan funds are not directly given by the government to the students, but to their respective schools.

A federal student loan can be subsidized or unsubsidized. The subsidized type is mostly awarded to students that show significant financial needs. This means that the government will pay for the interest, so students only have to pay for the principal amount after graduation. Stafford Student Loan and Perkins Loan are two examples that contain these features.

To begin the process, it’s important that you submit the FAFSA. This is used to determine the type of financial aid you’re qualified for. After the qualification process, you’ll be given a Student Aid Report that’ll tell you of your tuition contribution. The letter of award, which comes weeks after, states the type and amount granted to you.

Federal loans, in most cases, prove to be insufficient to fully finance a college education. During those situations, students could still choose to apply for a private education loan. They can use this to supplement their existing financial aid to cover all their education expenses. Private student loan programs are offered by lending companies and banks.

Choosing a private education loan has its perks. For one, it offers higher loan limits to make sure all expenses are accommodated. The approval and processing tend to be easier and faster as well. And you can use the money in any way you like. Unfortunately, this also has its downsides: it requires good credit history and has higher interest rates and multiple service fees.

Before submitting yourself to any loan agreement, make sure to exhaust other options. You can even apply for education grants. But if you really don’t know what student loans to choose, you can always get the help of your school financial aid consultant.