A student loan is basically a form of unsecured loan designed to assist students in paying for college education and all the associated fees, including tuition, books and other supplies, and even living expenses. Most student loan programs are federally funded. The US government distributes more than six billion dollars per year in student loan debt to American students through various student loan programs. However, it is important that you know the repayment options and consequences if you should default on your student loan.

There are several federal student loans that offer subsidized or unsubsidized options. The two most common federal funding sources are the Federal Perkins Loans and the Direct Plus Student Loan programs. Subsidized programs provide partial or full payment of tuition costs for students who qualify. For students with low interest rates and otherwise perfect FICO scores, subsidized student loans are an excellent choice for financing your education. In exchange, you will be required to make monthly payments that are substantially lower than the full cost of attendance, as well as complete specified tasks, such as the documentation of your parents’ income and insurance coverage, among others.

Conversely, unsubsidized student loan programs are available to any student who does not meet the eligibility requirements. The federal student loan forgiveness program qualifies students for forgiveness if they were delinquent on their student loan payments for a period of five years or more. Eligibility requirements vary from program to program, so it is important to fully explore your options and understand all the parameters before applying for federal student loan forgiveness. While these programs do not forgive the entire amount owed, student loan forgiveness does eliminate payment penalties and a portion of interest.

You have two main choices for repaying student loans. First, you can choose to have the balance forgiven and transferred to another lender. This process is known as “submitting an Offer to Accept” (ASE). Second, you can apply for federal consolidation assistance, which allows you to combine all of your student loans into one loan. Both types of repayment options will have varying effects on your credit rating, so you should consider this carefully when determining which method is best for you.

Now, what about private student loans? How do they work? They pretty much just work the same way federal consolidation programs do. If you are eligible, your lender will issue a federal student loan with a new start date, making your payments immediately. In some cases, the interest will be reduced and in others, it may be eliminated entirely. Your credit check generally doesn’t come into play at all.

As aforementioned federal student loan forgiveness does not generally erase your debts completely, but it does reduce them to a level you can pay back. As mentioned above, both types of repayment plans generally have similar requirements. If you are unable to repay your loans, you may still be able to work out payment arrangements with your lender’s, though it’s important that you keep track of any correspondence from your lenders to ensure that you’re getting the most affordable option.

So how do you find out more information about federal student loans? You can visit the website of the Consumer Financial Protection Bureau. Here, you’ll find detailed information about federal aid programs, as well as contact information for the individual lenders. You can also search for local groups in your area that focus on student loan issues. Your state’s attorney general and your local consumer protection office can also give you helpful information, either by phone or in person.

It’s important to remember that federal loans are not necessarily the best choice for students who don’t have a lot of financial aid money available. Private loans generally have more flexible terms, and many lenders now offer special financing for students with good credit history. If you are a student who’s considering both federal loans and private loans, it’s a good idea to consider your other options first. Once you’ve determined that you have the financial ability to repay your loan, you can then focus on researching lenders and finding the best loan for your situation.