We’re here to help you understand student loans as a tool to help you pay for college. Whether or not you choose to borrow money to pay for college, we want to make sure you understand how student loans work so you can make the best decisions for your educational future.

What do I need to know about loans?

Student loans aren’t “good” or “bad”—they’re simply a tool that’s available to help you pay your college tuition, fees, and expenses. However, it’s important to make good decisions and choose the right resources when paying for college.

Are student loans a bad idea for me?

If we all had the choice between a scholarship or a student loan, we’d all choose the scholarship! However, even with scholarships and/or grant aid, taking out student loans to pay for college might still be necessary.

As you consider whether or not to take out loans, keep in mind the future earnings potential of a college degree. According to Georgetown University’s Center on Education and the Workforce report The College Payoff, a bachelor’s degree is worth $2.8 million on average over a lifetime of earning and allows you to earn 84% more than another person with only a high school diploma.

Is borrowing the right choice?

This question is different for each student each academic year. In some years, you may not need to borrow any student loans, as your costs may be lower, or you may have other resources available to pay your tuition. In other years, you may need to borrow the full amount of student loans offered to you due to a changed work situation, or increased living expenses. The choices you have to make about taking out student loans will likely be different each year.

Check out the potential earnings in your career path to get a sense of what you’ll earn after you’ve graduated. When considering student loans, one approach to borrowing is to not borrow more than the average first-year salary you expect to earn based on your major. If you do decide to take out student loans, make sure to review your financial aid award and your student bill in UNCGenie to ensure you’re aware of all your financial obligations and the financial aid available to you. And if you have any questions, we’re always here to help!

Types of Student Loans

There are many types of financial aid available to UNC Greensboro students looking for assistance with the costs of college. Aid can come from a variety of sources that may or may not require a FAFSA. UNCG recommends that all students file a FAFSA every year to maximize their eligibility for most types of aid. You can learn more about types of student loans here.

Most students are eligible for loans to help with the cost of college, but there are key differences between federal and private student loans.

Federal student loans are issued by the government. They’re not based on your credit score, but instead on your grade level and dependency status. To qualify for federal student loans, you must complete a FAFSA (Free Application for Federal Student Aid).

  • Most undergraduate students will be eligible for a combination of direct Subsidized and Unsubsidized loans.
  • Subsidized loans don’t gain interest while you’re in school; interest begins accruing once you’re in repayment, generally six months after your last day of full-time attendance. 
  • Unsubsidized loans gain interest from the time they’re disbursed. 
  • The interest rate for student loans is set yearly by the Department of Education and remains fixed for the life of the loan. 

Additional information on yearly and aggregate federal direct loan limits can be found here under the subtopic Loan Limits.

Private or alternative student loans are made by private entities such as banks, credit unions, or other private lenders. Private loans don’t require a FAFSA and are credit-based. They should only be used as a last option to bridge the gap between the cost of attendance and the amount of federal, state, and institutional aid you’re awarded.

  • Private loans will typically have higher interest rates and stricter repayment terms, which may mean they’re more expensive than federal loans, and must be repaid sooner.
  • Private loans also require you to have a good credit history and/or a co-signer.

For more information, read our article on Spartan Central under Private Loans.

You can also check out this video on student loans to learn more about the differences between federal and private loans. 

You may also be eligible for additional federal loan programs such as Federal Direct Plus Loans

Parents of undergraduate students may apply for a low-interest Federal Direct PLUS loan to cover additional educational expenses. PLUS loans are credit-based and require an additional application. However, if your parent is denied a PLUS loan, you become eligible for additional Unsubsidized loans up to the independent student loan limits.
Graduate students may also be eligible for federal loan programs such as Federal Direct Unsubsidized Loans and Graduate Plus Loans. We’ve created videos for you with more information on researching and applying for federal and private loans as a graduate student.

How do I qualify for loans? How much can I borrow?

To be eligible for federal student loans, you must: 

You can read more about general financial aid eligibility requirements here and here.

It’s important to know if you’re close to or meeting annual or aggregate loan limits. These limits can also impact your loan eligibility. Annual loan limits are based on grade level and dependency status. Aggregate loan limits are based on degree type. Click on Loan limits here to learn more.

Loan Repayment

Student loans are generally like any other type of loan and have to be repaid. There are typically provisions and protections in place to help make repayment less stressful.

When do I start paying back my loans?

Most students begin repaying their federal loans six months after graduating from college. This six-month span is called the grace period when no payments are due. During this time, you’re finding work, getting a start on your career, and establishing your ability to start repaying your student loans. 

There are two other situations when the clock starts on your six-month grace period and loan repayment may begin:

If you decide to take a semester or a year off, your loan repayment period begins after the six-month grace period ends. If you resume half-time enrollment before the six-month period is over, you’re no longer in repayment, and you’ll receive the full six-month grace period when you graduate, drop below half-time, or stop attending.

What are my repayment options?

There are numerous repayment plans currently available. When you begin repayment, your loan servicer may assign you to a standard plan that requires a fixed payment amount, usually for 10 years. However, you may select a different plan based on your specific financial situation. Use the Loan Simulator to determine which plans you’re eligible to use, then contact your loan servicer to discuss changes, if necessary. 

Learn more about these repayment plans:

  • Standard Repayment Plan
  • Extended Repayment Plan
  • Revised Pay As You Earn Repayment Plan (REPAYE)
  • Pay As You Earn Repayment Plan (PAYE)
  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)
  • Income-Sensitive Repayment Plan

Consolidation is the process of combining multiple federal student loans into one loan with a fixed interest rate. This gives you a single monthly payment instead of multiple payments across all your individual loans. The interest rate can often be lower, too, as it’s based on the average rates of the loans being consolidated. Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs. 

What are the pros and cons of consolidation? 

  • Cons
    • Increased repayment period: can range from 10–30 years.
    • A longer repayment period means you could end up paying more in interest over the life of the loan.
    • Accrued interest is added to the principal loan balance.
    • You could lose borrower benefits such as interest rate discounts, rebates, or cancellation benefits.

As with any decision involving financial aid, learn more about whether consolidation is right for you.

What are Deferment and Forbearance?

Deferment and forbearance allow you to temporarily stop making payments on your student loans, or to temporarily reduce your monthly payment amount for a specified period.

Deferment is a temporary postponement of payments that can happen if:

During deferment, interest generally doesn’t accrue on Direct Subsidized Loans, the subsidized portion of Direct Consolidation Loans, Subsidized Federal Stafford Loans, the subsidized portion of FFEL Consolidation Loans, and Federal Perkins Loans. All other federal student loans (such as Direct Unsubsidized Loans and PLUS Loans) that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).

Forbearance is a period during which your monthly loan payments are temporarily suspended or reduced due to certain types of financial hardships. You can request a general forbearance if you’re temporarily unable to make your scheduled monthly loan payments due to:

During forbearance, principal payments are postponed but interest continues to accrue. Any unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), which will increase the total amount you owe. Studentaid.gov has more information on deferment, forbearance, and other ways to manage your loans when you need additional help.

What does default mean? What are the consequences if I default?

Defaulting on your student loan(s) can have very serious implications for your personal credit score—which can have major impacts in many areas of your life for years to come—and your ability to access other federal aid resources and some state funding. Your tax refunds or your wages could be garnished. Defaulting could even impact your Social Security benefits.

Consequences of defaulting

If your student loans go into default:

This is critical: contact your loan servicer right away if you need assistance! They cannot help you if you don’t reach out to them and may be willing to work with you on a solution. Learn more about steps you can take to avoid going into default, and if you do go into default, how to get out again.

Are there opportunities to have my loans forgiven?

Loan forgiveness means your eligible student loans may be forgiven, canceled, or discharged, either in part or entirely, if you qualify for a forgiveness program. Not everyone will qualify for these programs.

The two main forgiveness programs are:

You may not receive a benefit for the same qualifying payments or period of service for Teacher Loan Forgiveness and Public Service Loan Forgiveness. 

In addition to the PSLF and TLF programs, there are a number of other instances that may qualify you for loan forgiveness. Studentaid.gov has more information on these. You must continue to make on-time payments even if loan forgiveness is on the horizon for you.

Federal student loans may be discharged or canceled under certain conditions

  • Closed School Discharge
  • Perkins Loan Cancellation and Discharge
  • Total and Permanent Disability Discharge
  • Discharge Due to Death
  • Discharge in Bankruptcy (in rare cases)
  • Borrower Defense to Repayment
  • False Certification Discharge
  • Unpaid Refund Discharge
  • Forgery Discharge

Where can I get more information?

We want you to have as much information as possible about these important financial decisions. Here’s a list of additional resources, including videos and calculators, to help you plan financially for college:


Office of Financial Aid and Scholarships

  • Office hours: Monday-Friday, 9 a.m.- 5 p.m.
  • Phone: 336.334.5702
  • Email: Contact Form
  • Mailing Address: PO Box 26170, Greensboro, NC 27402-6170
  • Campus Address: 159 Mossman Building*
  • *Drop-Ins Welcome.