Georgia Student Finance Commission


Student Loans - Understand the Features of a Loan

College Money Matters

Student Loans - Understand the Features of a Loan

Student Loans - Understand the Features of a LoanAs an undergraduate student, you have a lot on your mind — whether it's moving away from home and adjusting to college life, or studying hard to make those grades. Moreover, many students first get involved with major finances — such as student loans — during their undergraduate years, adding to the responsibility of being a college student.

Before borrowing any money, regardless the reason for borrowing (car, house, or education) all loans will have these common features.  They are the way to compare the different types of loans to make sure the one selected is the best one for you. 

Loan Features:

  • Interest rate: The cost of borrowing money
    • Compounding interest: The accrued interest is added to the principal (the amount originally borrowed) or the loan balance which increases what you owe to the lender. The next time interest is calculated, it is based on the new principal. This continues until the loan is paid in full.
    • Flexible or variable interest: An interest rate that can increases and/or decreases during the life of the loan.
    • Fixed: A set interest rate that remains the same for the life of the loan.
  • Loan period: The time it takes for a loan to be paid in full.
  • Loan limits: The maximum amount of money lent to a borrower.
    • Annual: The maximum amount of a loan in a year (academic year).
    • Aggregate: Maximum amount a student can borrow.
  • Grace period: Time period after disbursement which no payment on loan is required of the borrower. For student loans, it’s the time period after the borrower is not enrolled or is enrolled less than half-time or graduated during which no payment on loan is required.