Sparrow's Student Loan Guide

Ultimate Guide to Student Loans

Many students take out loans to help pay for college. This in-depth guide looks at the best student loans you can get and how to apply for them.
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Sparrow Team
Sparrow Team
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Updated
February 21, 2023

What are student loans?

Student loans are one of the primary ways people pay for their education expenses, such as tuition, books, and living costs. Student loans are typically offered by the government, banks, or other financial institutions. Unlike other forms of financial aid, such as scholarships and grants, loans must be paid back, usually with interest. As a result, students typically take out loans after exhausting all other financial aid options.

There are three types of student loans: federal loans, private loans and refinance loans once you leave school. Before you apply for a student loan, be sure to consider multiple factors, such as the loan’s interest rate and repayment terms, as well as its potential impact on your credit score and budget.

Learn more about student loans

Quick and easy guide

1The different types of student loans

2Types of federal student loans

3Types of private student loans

4Types of student loan refinancing

How much debt can you afford to repay?

Sparrow recommends student loan payments consume no more than 10% of take-home pay. How much does that payment allow you to borrow?

Expected first year salary
The average starting salary for 2017 was $49,785
$55,260
$0
$100,000
Loan term
The standard repayment plan for most student loans is 10 years
10 years
1
25
Interest rate
The federal direct student loan fixed rate is 4.99%
4.99%
0.00%
15.00%
Loan Costs
The calculations below assume a tax rate of 25% and limit payments to 10% of your take-home pay
$3,453.75
Estimated monthly take-home pay (post-tax)
$345.38
Afforable monthly payment
$32,577.43
Total amount of loans you can afford

Discover more about student loans

Explore our top student loans picks by category

Student Loans in Four Steps

Step 1: Fill Out the FAFSA Form
You will need to complete the FAFSA form to determine your eligibility for federal financial aid. This application will take into account your family's financial information and help you determine the different financial aid options available to you, including federal loans, private loans, scholarships, grants, and work-study.
Step 2: Exhaust Federal Loans
While everyone's situation is different, in general, you should borrow federal student loans before borrowing private student loans, which may have fewer repayment options and borrower protections compared to federal loans.
Step 3: Compare Private Loans
Sparrow can help you find right private student loan. Think of Sparrow as the Expedia of student loans. With Sparrow, you can compare loan offers from multiple lenders side-by-side so you know exactly how each loan offer stacks up when it comes to APR, monthly repayment, total repayment amount, and repayment options.
Step 4: Prepare for Repayment
When you need to being repaying your student loans depends on the repayment plan you selected. Some students start repayment as soon as the loan is disbursed, while others defer payments until after graduation. When the time comes, you'll need to start making monthly payments to your lender, potentially with interest.

What's the difference between each
type of federal student loan?

1Direct subsidized loans

2Direct unsubsidized loans

3Parent PLUS loans

4Grad PLUS loans

What's the difference between each
type of private student loan?

1Private student loans

2Refinance loans

Ultimate Guide to the FAFSA
See how to qualify for federal student aid to help pay for college.
Ultimate Guide to Federal Student Loans
An overview of the types of federal student loans and how to apply.
Ultimate Guide to Private Student Loans
A step-by-step breakdown to ensure you're getting the right private student loan.
Ultimate Guide to Refinancing
Learn about how refinancing works and when you might want to do it.