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What Does a Student Loan Cover?

Taking out a student loan is how the majority of students get through college in the US. A student loan is meant to cover various aspects of a student’s life and not only the tuition fees. It helps students focus on their studies rather than having to worry about paying rent.

Before you take out a student loan, make sure you are aware of the terms and conditions, what it is meant to cover, and your eligibility.

What Expenses Should You Expect In Your College Life?

Starting college is costly. With most college tuition fees starting at $20,000, it is a big financial burden for students to support themselves without financial assistance. When you attend school, you are paying for so much more than just the tuition fees.

Accommodation and Transport

Out-of-state students have to plan for transportation and accommodation. Anticipating the cost of living requires abundant research beforehand. Since you will not be living at home, you have to figure out food costs, bills, and other necessities.


College textbooks and exercises are not always free. Depending on your program, you may have to pay extra for some software. Your school may give a student discount but most schools do not fully subsidies these extra costs.

Having Fun

Aside from the life essentials, you also have to set a budget for entertainment. You will be socializing with other students a lot, participating in school activities, and perhaps committing to a few unpaid internships. All these will add up to the expenses, especially if you plan to travel home for a visit frequently.

Full-time students are able to take up part-time work to make up for a portion of the expenses. However, it is unlikely that you will make enough to cover the whole cost since you will spend most of your time studying.

What Does a Student Loan Cover?

Collage students

Nearly 90% of student loans are made through the US Department of Education. They are the biggest loan grant authority in the US. Students mostly choose to borrow a loan here due to the low interest rate and flexible payment schedule. Some loans are payable based on your future earnings. The actual interest rate when you repay the loan depends on inflation and other factors.

There are numerous student loan plans available. According to each student’s financial capacity, they can freely choose a plan that fits their agenda. Some students choose to take out extra to cover all expenses throughout their entire academic years, while others choose to borrow half of the tuition fees only.

Federal student loans help students with financial difficulties to gain equal access to education opportunities. The loan directly pays your tuition fees, rent, and other necessities associated with your school. The excess amount shall be paid into your account for you to cover any living expenses that may incur.

Getting a student loan is the easiest and fastest way to cover your living costs. Most students combine a loan with other scholarships and subsidies to reduce the payable amount. It is the most realistic way of getting through college without adding a burden on family members.

Who Is Eligible For a Student Loan?

All American students are eligible for federal student loans. Each student loan contract is legally binding. Students must repay the loan upon the agreed due date. Failure to do so will lead to legal consequences. You may fail a background check at work or a credit check at the bank in the future if you do not pay the loans back as required.

Unfortunately, international students are not eligible for federal student loans. Instead, they can apply for an international student loan with an American resident as a guarantor. Without a reliable guarantor, you will not be able to get the loan.

The US guarantor must have an excellent credit record and has lived in the US for the last 48 months. The purpose of having a guarantor is to ensure accountability. In case you leave the country without paying back your student loan, your guarantor is legally obliged to pay your debt for you.

Your guarantor will face the same legal consequences as you if they fail to repay it in your name. The policy aims to deter international students from fleeing the country without repaying. A guarantor is usually a relative or a close family friend as you have to prove the relationship as well.

For international student loans, the interest rate is set differently. It also adjusts for the inflation rate and other factors periodically. The interest rate is typically higher than a federal student loan, although it is kept within a certain range.

International students without a guarantor will not be able to apply for a student loan. In this case, they can only apply for scholarships or subsidies through other means if they are eligible.

When Do You Have To Pay Back The Student Loan?


Each repayment plan differs in its payment details and instructions. The most common plan students take gives them a six-month grace period before they start repaying the loan. It gives students sufficient time to plan out their future instead of rushing into paying.

Other plans include paying for the interest rate while in school and repaying the principal after graduating and repaying everything together with a grace period of 45 days. Your advisor will discuss with you the best repayment schedule based on your financial ability. Therefore, the terms and conditions will not be the same.

If you go into further studies immediately, you may be able to defer payment plans or even get another loan for the program. Some master’s programs or research positions are paid. Hence, you are also required to start repaying previous loans, despite being a student.

Typically, it takes around 10 to 25 years to fully repay your student loans. Once you have settled on a desirable payment plan, you will get automatic updates on your upcoming payments, interest rates, and payable amount.

There will be added interest if you fail to meet payment deadlines. It will also affect your credit score. Should your financial condition change, you should notify your advisor immediately to discuss a new repayment plan. Usually, you are able to negotiate a plan proportionate to your monthly salary.

International students mostly abide by the same repayment principles. Lenders are more cautious about giving loans to international students. Hence, your repayment details may be slightly harsher.

You have to set up an account as per instruction so you can send money from abroad to repay your debt every month. Both you and your guarantor will be notified when there is a missed payment. If you do not respond to the ultimatum or fail to meet subsequent payments, your guarantor will be chased.

Students can choose to speed up their repayment plan. Some may become more well-off in the future and prefer to repay all the debt once and for all. You should notify the responsible authority to see what the interest rate will be.

Being debt-free is highly desirable for your other life planning such as buying a property and investing. So, it is usually recommended to pay off your debt altogether whenever you can.

How Else Can You Get Financial Aid?

1. Getting a Part-Time Job Off Campus

This is the most direct way to get extra money to supplement your college life. There are loads of student jobs available in every area. For example, private tutoring, nannying, and bartending are extremely popular among college students. These jobs do not require extensive knowledge, nor do they take up a lot of time.

You can create your own schedule with these positions so you can balance your study and private time. Most college students take up part-time jobs that are unrelated to their studies. Still, some students do not prefer this form of financial aid because they do not add value to their studies and profession.

2. Apply For Scholarships And Subsidies

The majority of colleges in the US have a wide range of scholarships and subsidies available. These scholarships are either funded by the school itself or by private donors.

Originally, scholarships are here to reward the best students in class, alleviating them from financial pressure so they can focus on their studies better. This type of scholarship is available to every student enrolled in the program.

Now, scholarships are widely used to close the gap among students with different backgrounds. For example, there are scholarships given to ethnic minorities and immigrants.

These types of scholarships aim to give equal access to education for all groups of people. Specific scholarships are created because access to education is not always the same for different groups. Therefore, having special scholarships for them gives them a better chance in school.

A diverse scholarship structure is a big attraction for successful institutions in gaining more international students, who often fail to get student loans. It is often believed that a reputable school should have a great variety of subsidies to support students.

3. Conduct On-Campus Work

There are different jobs available on campus. You may assist your professors in their research projects. They usually hire current students with in-depth knowledge of the subject. It is a great way to deepen your knowledge in the field as well.

Some student dorms allow students to commit to dorm duties in exchange for a rent reduction. You have to clean the entire dorm regularly and help the warden with various duties to get the discount. This is not always available and you should check with your student accommodation if they allow this.

On-campus work is preferred by many students as they grow a better sense of belonging to the community and the work relates to their profession more. They are able to gain hands-on experience while networking with experts in their chosen field.

4. Borrow From a Family Member

For some students, their family members are able to support them through college. This could be the best plan if your family is happy to lend you a grant. Discuss a payment plan with your family so they know when to expect repayment.

It is beneficial for both sides as you probably will be paying the lowest interest rate on the market while your family gets a little extra from the interest rate when you start paying. Besides, capable families often do not want their children to be swamped with student debt right after college so this is a clever solution for everyone to cover college fees.


The stress of going through college without financial support is frightening. A lot of students are worried about the appropriate student loans to take.

After reading this article, you should have a better understanding of how student loans work in the US and how you should choose your plan accordingly.