Student Loans

Learn all about student loans including where to get them, how to get them, and strategies to avoid massive loan debt by the time you graduate.

Frequently Asked Questions
  • What are the four types of federal student loans?

    The U.S. Department of Education currently offers direct subsidized loans, direct unsubsidized loans, direct PLUS loans, and direct consolidation loans. Subsidized loans are solely for eligible undergraduate students who demonstrate financial need to help cover the costs of a higher education, while unsubsidized loans are available for eligible undergraduate, graduate, and professional students, though eligibility isn’t based on financial need. PLUS loans are made to graduate or professional students as well as parents of dependent undergraduate students for education expenses not covered by other financial aid. A consolidation loan allows you to combine all of your eligible federal student loans into one loan with a sole loan servicer.

  • Should you pay off your student loans early?

    It depends on your financial circumstances. Since interest may accumulate on your student loans while you’re in school (depending on the type of loan), it may make sense to begin making payments toward your debt before the actual due date kicks in. There are no penalties for making prepayments on either federal or private student loans, so if you are able it can save you some money to start early.

  • What happens if you don’t pay off your student loan?

    The first day following a missed student loan payment, your student loan becomes past due (i.e., delinquent) until you either repay the past due amount or make other arrangements with your creditor. Remaining delinquent for 90 days or more will result in your loan servicer reporting the delinquency to the three major national credit bureaus. Following a certain period of delinquency, which varies based on the type of loan, there is also a risk of the loan going into default.

  • Can student loans repayments come out of your retirement funds?

    Per the Employee Retirement Income Security Act of 1974 (ERISA), most employer-sponsored retirement plans, such as a 401(k), are protected from seizure by creditors in nearly all cases. However, according to the Debt Collection Improvement Act of 1996, up to 15% of your Social Security payments can be garnished to repay your federal student loan(s) should you default. Fortunately, the amount garnished cannot reduce your monthly benefit payment below $750.

Key Terms

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Page Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Federal Student Aid. "Federal Student Loans for College or Career School Are an Investment in Your Future."

  2. U.S. Department of Education Federal Student Aid. "The U.S. Department of Education Offers Low-Interest Loans to Eligible Students to Help Cover the Cost of College or Career School."

  3. Finaid. "Prepayment."

  4. Federal Student Aid. "Student Loan Delinquency and Default."

  5. Equifax. "Can Creditors Go After My Retirement Accounts?"

  6. U.S. Government Accountability Office. "Social Security Offsets," Pages 6–7.

  7. Federal Student Aid. "When It Comes to Paying for College, Career School, or Graduate School, Federal Student Loans Can Offer Several Advantages Over Private Student Loans."

  8. Federal Student Aid. "You Know You Have to Fill Out the Free Application for Federal Student Aid (FAFSA®) Form, but Maybe You’re Not Sure What to Do."

  9. Federal Student Aid. "FAFSA® Deadlines."

  10. Federal Student Aid. "I Filled Out My FAFSA Form. When Can I Expect to Receive Information About My Financial Aid?"

  11. Federal Student Aid. "Student Loan Deferment Allows You to Temporarily Stop Making Payments."

  12. Federal Student Aid. "Direct PLUS Loans Are Federal Loans That Graduate or Professional Students and Parents of Dependent Undergraduate Students Can Use to Help Pay for College or Career School."

  13. Federal Student Aid. "Direct Consolidation Loan Application."

  14. Internal Revenue Service. "Topic No. 456 Student Loan Interest Deduction."