The Need for Undergraduate Student Loans

Many college students understand the need for undergraduate student loans. With the average cost of one year at a 4-year public school totaling $18,943 and $42,419 for a 4-year private school1, most college families have no way of coming up with that kind of money every year.

The reality is that most college students don’t receive enough scholarships and grants to pay for their education, although every bit of free money helps. In addition, college parents are sometimes unprepared for the overwhelming cost of college, and are only able to contribute small amounts to the bottom line without taking away from money needed for everyday life. That leaves most undergraduate students with one option: take out undergraduate student loans to pay for college.

If you are an undergraduate student in need of money to pay for college, make sure you look at your overall college financial aid picture. Before taking any undergraduate student loans, make sure you have looked for college scholarships and reported any changes in your family’s financial situation to your school’s financial aid office.

Federal College Student Loans

The most popular undergraduate student loans are Direct Stafford Loans. The Direct Stafford loan is the most widely-used, low-cost undergraduate student loan available. In order to qualify for federal undergraduate student loans, you will need to fill out the FAFSA each year. There is no credit or income check to qualify; you need only be enrolled at least half-time at an accredited school. You should look to borrow federal undergraduate student loans once you have maximized free money, like scholarships and grants.

Depending on your financial need, you may also qualify for other federal college student loans, such as the Federal Perkins Loan, if you are a previous Perkins Loan recipient. Check out our Student Loan Guide for specific information about each loan type, including interest rates and how to apply.

Private Undergraduate Loans

Many students find that due to low borrowing limits on federal college student loans, they still need more money to pay for school. Private undergraduate loans are credit-based college student loans made in your name. You can use private undergraduate loans to pay for all of your education costs, including tuition, room and board, travel, food, a computer and more. As an undergraduate student with little income or credit history, you will likely need a parent, relative or friend to co-sign a private loan with you in order to get approved. For more information, check out our section on Find a Co-signer.

Get more information on private undergraduate loans:

College Costs for Undergraduate Students

One way to reduce your need for undergraduate student loans is to stick to a college budget. When living on your own for the first time, expenses for food and extracurricular activities can get out of control. Once you draft a college budget, you might find that your lease is too expensive, or your cell phone charges are too high. Use our Monthly Budget Calculator to help you plot your expenses and get your finances organized. Remember, the less you take out in undergraduate student loans, the more money you can save in interest and the lower your payments will be after graduation.

1College Board, Average Published Charges for Full-Time Undergraduates by Type and Control of Institution, 2014-15 (Enrollment-Weighted)