Many students heading to college or universities and their families discover that the high costs of college mean that they will have to look for financial aid to help them cover them. When you are researching financial aid options, look first for grants and scholarships, then work study, and if you still need some assistance with college costs, apply for student loans. There two major types of student loans: subsidized and unsubsidized loans. Subsidized loans are the most advantageous type of loan, because the federal government pays the interest for the borrow while he or she is in school. However, subsidized loans are need-based and have limits to the amount that can be borrowed. If you discover that you do not qualify for subsidized loans, or you do not receive the amount you need, you might then look at the terms of unsubsidized loans.

Unsubsidized student loans are usually not need-based, which means that your family will not have to demonstrate financial need on the basis of your Federal Application for Federal Student Aid (FAFSA). These loans can either be funded by the federal government, or by private lenders; usually there are a few differences between these two lending sources. Private lenders may require a higher initial administrative fee, and may charge a higher interest rate for the life of the student loan.

An unsubsidized student loan will begin accruing interest as soon as the loan is disbursed. You may choose to make interest payments on the loan while you are in school; if you do not, the interest costs will continually build. While interest rates on student loans are relatively good compared to other types of loans, they do add up over the years you are in school. If you can possibly make interest payments on these loans while you are in school, it will help you with your loan repayment.

As with any type of student borrowing, it is important to attempt to obtain the funds you need for college in other ways than acquiring student loans. Further, always attempt to obtain federally subsidized loans if at all possible. It is also important to keep your loan obligations to a minimum. If you do end up with an unsubsidized loan, borrow only what you need for your college costs. Many college students borrow more than what is necessary, and then later regret having to repay these funds once they graduate.