As education becomes more and more expensive, many students must take out and consolidate student loans to pay for college.  It is not always the ideal solution, but there are many different types of student loan programs that try to make the process as easy and affordable as possible.  In fact, student loan interest rates are very low right now, so it can be a smart choice.  If you do decide on getting a student loan, here is what you need to know.

How to Apply For a Student Loan 

Applying for a student loan is pretty easy.  First, you need to fill out the FAFSA prior to the year you will need the loan.  For example, if you need a student loan in the fall of 2012, you should fill out the FAFSA in late 2011, but before March of 2012 at the latest.

Once you have completed your FAFSA, you will receive notification of the different types of Federal Student Loan programs you may qualify for.  This is where you need to start, as federal student loans provide the best interest rates and fee structures.

If you want to apply for a loan, you simply go to your school’s financial aid office, and fill out a Master Promissory Note.  With that note, they will then help you apply for the student loan programs that match you needs.  You only need to fill out the Master Promissory Note once, but you do need to apply for loans each year they are needed.

If you don’t qualify for any federal student loan programs, you could look for private student loans, but it is important to remember that these are usually more expensive and tend to have more restrictions.  

How Student Loans Work When You Graduate

Once you graduate, you will inevitably have to repay the student loans you took out.  It is important to remember that the collateral for student loans is your future earnings.  Furthermore, student loan debt can’t be discharged in bankruptcy.  So the bottom line is you will be on the hook for anything you borrow, and there is no getting out of it.

Most student loan programs give you a 6 month deferment period before having to repay the loan.  During deferment, you don’t have to make payments, but interest still accrues.  This period is designed to give you time to find a job, so that you can start making payments.

Once your deferment period is over, you need to start repaying your loans.  There are many repayment options, but the default is a flat monthly payment over 10 years.  If this doesn’t work for you, you could ask for income-based repayment, which gives you lower payments in the first years of the loan, and higher payments in the later years of the loan.

The bottom line is that student loan debt, while necessary in many cases, is a bad debt.  As such, you should only borrow as much as you need to get through school, and not any more.  Also, you need to make sure that you are going to be able to repay it when you graduate, because it will stick with you for a long time.