The total amount of student loan debt in the United States is now estimated to exceed $1 trillion

The total amount of student loan debt in the United States is now estimated to exceed $1 trillion

About 20 million Americans currently attend a college or university, and almost two-thirds of them borrow money to pay tuition and other expenses. The average debt for all borrowers is somewhere around $30,000, and that number continues to grow as tuition and other costs keep going up. Student loan programs offer some forms of relief to borrowers that are not usually available for other types of loans, such as payment deferrals and various repayment plans. Unlike many other types of loans, however, student loans are not subject to discharge in bankruptcy, except in extraordinary circumstances. Consumers should consider their options very carefully when considering borrowing money for education.

Federal Student Loans

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Student loans in the U.S. fit into two broad categories: federal loans and private loans. Federal loans are generally made directly by the U.S. Department of Education (DOE). Until 2010, the DOE also guaranteed loans by private investors.

Subsidized loans, in which the DOE pays some or all of the interest, are available based on financial need. Borrowers pay both principal and interest in unsubsidized loans.

Federal student loan programs include Federal Perkins Loans, Stafford Loans, the Federal Direct Student Loan Program (FDLP), and consolidation of existing federal loans under a new FDLP loan.

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