1. Federal vs. Private: Know the Difference

• Federal Loans: Issued by the government. They usually offer fixed interest rates and more flexible repayment plans (like income-driven options).
• Private Loans: Issued by credit unions, banks, or online lenders. These help bridge the "gap" when federal aid isn't enough. They may require a co-signer but can offer competitive rates.

2. Essential "Need-to-Know" Terms

• Subsidized: The government pays your interest while you’re in school.
• Unsubsidized: Interest starts growing the day the loan is issued.
• Capitalization: This is when unpaid interest is added to your principal balance. You end up paying interest on interest—avoid this by paying small amounts while in school if possible.
• Promissory Note: The legal contract. Read it closely; it’s your roadmap for repayment.

3. Smart Borrowing Strategies

• FAFSA First: Submit the Free Application for Federal Student Aid every year. It’s the only way to access grants, work-study, and federal loans.
• Borrow the Minimum: Just because you’re offered $10,000 doesn’t mean you should take it. Calculate your actual costs (tuition/books) and decline the rest to save on future interest.
• Watch the Rates: Fixed rates stay the same; variable rates can rise over time. For long-term budgeting, fixed is usually the safer bet.

4. Your Pre-Loan Checklist

• Exhaust all "free money" (scholarships and grants) first.
• Use a Loan Simulator to see what your future monthly payment will be.
• Check the Grace Period—know exactly when your first payment is due after graduation.
• Ask a Pro: Your financial aid office and your team at Cal Coast are here to help you navigate the fine print.

The Bottom Line

Borrowing for college is common, but borrowing informed is what protects your financial health. Reach out to your credit union today for guidance on building a plan that works for you.