Should I use savings, grants, scholarships, or loans first to pay for college?

The recommended order is to start with savings, grants, and scholarships — money you don't have to repay. Then look at federal student loans. Private student loans should come last, filling in the gap after you've maximized everything else. This approach helps minimize the total amount you'll need to repay after graduation.

What is the difference between federal and private student loans?

Federal student loans have fixed interest rates set by law, meaning everyone borrowing the same type of loan in a given year gets the same rate regardless of credit history. Federal loans also include income-driven repayment options and certain forgiveness programs that private loans don't offer. Private student loans use lender-determined pricing, and rates may be fixed or variable depending on the lender and the borrower's credit profile. It's generally wise to exhaust federal loan options before turning to private loans.

Do I need a co-signer for a private student loan?

Not always, but many students use a co-signer to qualify — especially younger borrowers who haven't had time to build a credit history yet. Private student loan approval involves a credit check and income eligibility review, so having a co-signer is completely normal and can help you qualify for better rates.

How much student loan debt is too much?

A useful rule of thumb is to try to keep total student loan debt below the graduate's expected first-year salary. For example, if you're going into a field with a median starting salary of $45,000, that's a meaningful cap to keep in mind as you compare financial aid packages and schools.

What are private student loans and who are they for?

Private student loans are loans offered by banks, credit unions, and other lenders to help cover college costs that federal aid doesn't fully address. They are available to undergraduates, graduate students, and students pursuing career training. Features can include competitive interest rates, multiple repayment options, and no origination fees or prepayment penalties. Private loans are best used after federal loan options have been exhausted.

Student Loans 101: What Students and Families Should Know Before Borrowing

Q: When should I apply for student loans?

Earlier than you think. The FAFSA — the Free Application for Federal Student Aid — opens each October for the following academic year, and filing as early as possible gives you the best shot at need-based aid. If you're considering private loans, starting early matters too, since private loans can take longer to process and you don't want to feel rushed close to enrollment deadlines.

Q: Should I compare colleges based on sticker price or net cost?

Always evaluate colleges based on net cost — the actual cost after grants, scholarships, and financial aid are applied — not the published tuition rate. The tuition listed on a college's website is rarely what families actually pay. Out-of-state tuition can be double the cost of in-state tuition, so the college you choose has a major impact on how much you'll need to borrow.

By: Kristi Chapman, VP of Lending

College is one of the biggest financial decisions a family will ever make. And yet, for a lot of students and parents, the conversation about how to actually pay for it gets pushed to the back burner — until an acceptance letter arrives and suddenly the clock is ticking.

Here’s the thing: by the time you’re looking at a tuition bill, many of the most important financial decisions have already been made — or missed. The earlier you understand how student loans work, the better positioned you’ll be to use them wisely.

Start with the Right Order of Operations

Before getting into the details of loans, it’s worth knowing how the borrowing conversation should be structured. Whether you choose federal or private student loans, you have to pay back the money you borrow, plus interest — whether you graduate or not. That reality makes it important to build your funding strategy in the right order.

The smart sequence: start with savings, grants, and scholarships — money you don’t have to repay. Then look at federal student loans. Private student loans come last, filling in the gap after you’ve maximized everything else. That’s not just good advice; it’s the approach First Class Community Credit Union recommends to every student and family who comes to us with questions.

Federal vs. Private Student Loans: What’s the Difference?

Federal and private student loans are often talked about in the same breath, but they work quite differently.

Federal student loans have interest rates that are fixed and set by law — everyone borrowing the same type of loan in a given year gets the same rate, regardless of their credit history. Federal loans also include repayment options tied to income, which can adjust monthly payments based on earnings and family size. Private student loans, by contrast, use lender-determined pricing, and rates may be fixed or variable depending on the lender and the borrower’s credit profile.

Federal loans also come with certain protections and forgiveness programs that private loans don’t offer. For that reason, it’s generally wise to consider private loans only after you’ve exhausted your federal loan options.

That said, private loans play an important and legitimate role. For many students, federal aid alone doesn’t cover the full cost of attendance — and that’s where private student loans, like those available through First Class Community Credit Union in partnership with Sallie Mae®, can help close the gap.

How Do Private Student Loans Work?

Private student loans through FCCCU’s partnership with Sallie Mae® are designed to work for a range of students — whether you’re an undergraduate, pursuing career training, or working toward a graduate degree. Features include competitive interest rates, multiple repayment options, and no origination fees or prepayment penalties. Graduate students also have access to a loan suite tailored to specific fields of study.

One thing to keep in mind: you’ll need to fill out a separate application for each private lender, and approval involves a credit check and income eligibility. Many students use a co-signer to qualify. That’s completely normal, especially for younger borrowers who haven’t had time to build a credit history yet.

The Financial Question Nobody Asks Early Enough

Here’s where the real a-ha moment lives: most families evaluate colleges based on reputation, programs, location, and campus culture. Financial fit often comes last — if it comes up at all. But the college you choose is the loan decision.

Out-of-state tuition can be double the cost of in-state tuition, meaning four or five years at an out-of-state school could cost the same as eight or ten years at an in-state institution. That’s a significant difference in what you’ll owe when you graduate.

A useful rule of thumb: try to keep total student loan debt below the graduate’s expected first-year salary. If you’re going into a field with a median starting salary of $45,000, that’s a meaningful cap to keep in mind as you’re comparing financial aid packages.

And don’t just look at the sticker price. The tuition listed on a college’s website is rarely what families actually pay — your real number is the net cost after grants, scholarships, and financial aid are applied. Every school you’re seriously considering should be evaluated on net cost, not the published rate.

When Should You Start Planning?

Earlier than you think. Students whose families start planning early often graduate with significantly less debt, which gives them more freedom to make career choices based on passion and opportunity rather than immediate earning potential.

Practically speaking, the FAFSA — the Free Application for Federal Student Aid — opens each October for the following academic year. Filing it as early as possible gives you the best shot at need-based aid. If you’re considering private loans, starting early matters there too, since private loans can take longer to process and you don’t want to feel rushed close to deadlines.

Ready to Explore Your Options?

If private student loans are part of your plan, First Class Community Credit Union is here to help. Visit our student loans page to learn more, or explore the full range of Sallie Mae® loan options available through our partnership. You can also call us at 1-800-392-7122 or stop by one of our branch locations — we’re happy to help you think through the right path forward.