Academic Programs
You’ve hit “apply.” The acceptance letter arrives, and the countdown begins until you step into your first college class. But as you celebrate, reality hits: that first tuition bill is coming, and you’re not sure how you’ll pay it.
College is a big investment—but that doesn’t mean it’s out of reach. For many, undergrad student loans, especially federal loans, open the door to earning a bachelor’s degree without putting life on hold.
In fact, around 30–40% of undergraduates take out federal loans to help cover the cost of their college education. Student loans, when used wisely, are a valuable tool that makes higher education more accessible, allowing you to prepare for a future with more options and higher earning potential.
Let’s talk about how student loans work, what they can cover, and why they might be a smart step toward your goals.
How Do Student Loans Work?
Federal student loans (through Federal Student Aid) and private loans (through banks or credit unions) are smart ways to pay for college now and repay later. Repayment plans usually start about six months after graduation, giving you time to get your feet under you before making payments.
-
Federal loans often offer lower, fixed interest rates and flexible repayment plans.
-
Private loans vary by lender and typically allow you to borrow up to your school’s certified cost of attendance.
Though it might seem like free money now, your loans will accrue varying amounts of interest. Interest is the cost you pay to borrow money. The current federal student loan interest rate is approximately 6–8% of the unpaid amount borrowed (subject to annual change). Knowing how interest accrues will help you plan ahead and borrow responsibly.
It’s important to know your limits. Undergraduate loans have annual and lifetime borrowing limits, depending on your year in school and dependency status. Private loans vary but are capped by your total cost of attendance, minus any other aid you receive.
Want a step-by-step overview of all your aid options? Download our free Financial Aid Guide.
What Does a Student Loan Cover?
While student loans can take care of the bulk of your tuition, they also offer assistance for other costs associated with your degree, such as:
-
-
-
-
Course fees, textbooks, and lab costs
-
Technology needed for your classes
-
Housing and off-campus rent
-
Groceries and day-to-day expenses
-
Transportation to and from campus
-
-
-
You can use your student loans to pay for rent, food, and even summer classes if you’re eligible for aid during that term.
How Do I Get a Student Loan?
1. Fill out the FAFSA.
The Free Application for Federal Student Aid (FAFSA) is your gateway to federal loans, grants, and work-study options. It opens each fall (typically October 1), and it’s best to apply early to maximize aid.
Let us walk you step-by-step through completing your FAFSA application
2. Review your financial aid offer.
After acceptance to a college, you’ll receive a financial aid award letter showing what grants, scholarships, and federal loans you qualify for. Review carefully to decide what you need, and accept them in your school’s portal.
3. Complete entrance counseling and sign your loan agreement.
You’ll take a short online counseling session and sign your Master Promissory Note (MPN), which is your official promise to repay.
4. Consider private loans to help cover the remainder.
If you need more funding, you can research the best private student loans after using all federal options. However, you should take this step carefully, as private loans typically have higher interest rates and less flexible repayment terms.
Subsidized vs. Unsubsidized Student Loans Explained
When it comes to federal student loans, you’ll often hear about subsidized and unsubsidized loans. Understanding your different undergrad student loan options can help you plan wisely for college costs.
Both loan types allow you to borrow money to pay for tuition and other expenses, but they handle interest differently while you’re in school. With subsidized loans, the government covers the interest on your loan. At the same time, you’re enrolled at least half-time, during your six-month grace period after graduation, and any deferment periods. This means your balance won’t grow while you’re focusing on your classes.
Unsubsidized loans, on the other hand, start accruing interest from the moment the funds are disbursed. Although you don’t have to make payments while you’re in school, any unpaid interest will capitalize (add to your total loan balance) once repayment begins.
While it may sound overwhelming, many students manage unsubsidized loans by paying the interest while in school, even in small amounts, to keep the balance under control.
7 Smart Benefits of a Student Loan
1. Access to Education You Couldn’t Otherwise Afford
Loans make college possible for millions of students every year. Borrowing money can fill the gap between aid and total costs so you can get a head start on your career and set yourself up for success.
2. Build Credit Early and Responsibly
Making on-time payments after graduation helps you build valuable credit. Starting adulthood with a healthy financial track record has long-term perks for major financial decisions down the road, such as buying a vehicle or getting a mortgage.
3. Lower, Fixed Interest Rates for Federal Loans
Federal loans often have better rates than credit cards or private loans. If college is the right choice for your future, looking into federal loans is often the smartest move. Bonus: Interest on federal loans is fixed, so you always know what to expect.
4. Flexible Repayment Options After Graduation
Federal loans come with income-driven repayment plans and options for deferment, forbearance, and even loan forgiveness, so you can pay them off when you’re able.
5. No Payments Until After Graduation
With student loans, you can focus on school without juggling payments—and most federal loans offer a 6-month grace period after graduation, too.
6. You’re Not Alone—Millions Use Student Loans
The average student loan debt for undergrads can seem overwhelming, but student loans truly are manageable with smart financial planning. If you treat them wisely, loans aren’t a burden—they’re an investment in your future.
7. It’s Good Debt—Really
Student loans are considered “good debt” because they help increase your future earning power. The return on investment for a bachelor’s degree continues to be strong over your lifetime, with the average student earning back 681.95% of their original investment.
Start Your College Journey At Half the Cost: Minimize Your Undergrad Loans at SVU
Undergrad student loans are often a stepping stone toward earning your degree and starting your career, but where you choose to attend matters.
At Southern Virginia University, you can earn your degree at less than half the average cost of private colleges in the U.S. We award over $5 million in financial aid each year, including scholarships, grants, and work-study opportunities, to help you reduce your borrowing needs.
SVU’s financial aid process is simple, clear, and personal. From merit scholarships to federal aid, our team will help you find the best way to fund your education while minimizing debt.
