Student and Parent Loans

How to think smart about taking out loans to pay for your education

Your first choice of financial aid should, of course, be free aid—like grants and scholarships —that you won’t have to pay back. But most students and families need more help to pay for school. That’s where student loans come in. Student loans can help cover the gap between the free aid you can access through grants and scholarships—and the full price of higher education.

The difference is that student loans must be paid back, with interest (the fee you pay the lender for borrowing their money). So it’s important to carefully compare your options—and think smart about the money you’re borrowing.

Before you borrow, learn what you need to know about the way loans work.

Download our loan guide download icon, My Education Loans, or request a printed copy in the mail. 

Learn more about vsac student & parent loans

You get to choose which student loans you want to take out—and how much you want to borrow. Compare all your options. And be sure you understand all costs and terms.


There are 3 main loan options to choose from:

  1. Federal loans 
  2. Private loans—like VSAC’s Vermont Advantage loans 
  3. Loans from your college or career training school


The main points you’ll want to consider for each education loan option are:

  • Interest rates: Some student loans offer a variable interest rate (an interest rate that changes over time). Others—like federal student loans and Vermont Advantage loans —offer a fixed interest rate that stays the same over the life of the loan. While variable rates may seem great at first, they can end up costing a lot more over time.

Fixed vs. variable interest rate—2 questions to help you decide:

  1. Do you plan to pay the loan back quickly? You may save money with a variable rate loan. Or, you can choose a Vermont Advantage loan with immediate payment. You get the benefit of a low fixed interest rate in exchange for starting to repay your loan while you’re still in school. So you can pay less and pay faster!
  2. Do you want more time to pay off your loans—or not quite sure and don’t want the risk of a higher interest rate in the future? Then a fixed rate loan is the way to go. With Vermont Advantage loans, there are several repayment options to choose from.

You’ll also want to steer clear of loans offering a “teaser” interest rate that requires strict qualification. People often apply for these loans thinking they’ll receive the low advertised interest rate—only to find out at the end of the application process that their rate is much higher. If this does happen to you, don’t despair! As a borrower, you have the right to cancel a loan within 3 days of being issued a final loan approval.

Learn more about how student loan interest works >

  • Fees: Some student loans charge what’s known as an “origination fee” (or “loan fee”) for starting the loan. Look for loans with low or no origination fees—like the Vermont Advantage loans.
  • Repayment options: There are many different options for repaying your student loan. Figure out what's most important to you and your family. When comparing options, find out:
  • Payment responsibility: Some families want the student to take out the loan, while others prefer that the parent take on the debt. No matter who is taking out the loan, be sure you understand your options:
    • Student only: Some loans allow the student to be the only person responsible for the loan. These include federal Perkins, and federal Direct Subsidized and Unsubsidized loans.
    • Student with cosigner: Some loans (such as VSAC’s Vermont Advantage Student Loan) require a cosigner (a person with a good credit history who agrees to be held responsible for the payments if the student fails to pay). Learn more about cosigners > 
    • Parent only: Some loans require only the parent to be held responsible for the loan. These include federal Direct PLUS loans for parents and VSAC’s Vermont Advantage Parent Loan.

Learn more about Vermont Advantage loans

Compare Vermont Advantage and Direct PLUS loans plus get details on student and parent loan options.            


When it comes to student loans, your goal should always be to minimize your debt. Follow these 4 tips for keeping your debt as low as possible:

  1. Estimate monthly payments ahead of time. Ideally, student loan payments should consume no more than 15% of your income after you graduate from college. Before you consider any student loan, use The College Board’s loan payment calculator to estimate your future monthly payments. Remember, you’ll likely need to borrow for 4 years of school. So, consider the entire amount you will be responsible for when you finish your education.
  2. Look for ways to reduce the amount you need to borrow. You can consider:
  • Cutting your current expenses to put more money toward school now
  • Take advantage of tuition payment plans to spread payments out over the year
  • Apply for scholarships 
  1. Pay interest while in school. For some loans, interest accumulates while you’re in school—even though you’re not required to make payments on that interest. But if you delay paying the interest, that interest will be added to your loan balance—and future repayment calculations will be based on this larger balance.
  2. Pay your loans on time and as quickly as possible. The faster you pay down your loans, the less interest you’ll pay. Learn more about how student loan interest works > 

Learn more about Vermont Advantage loans

Compare Vermont Advantage and Direct PLUS loans plus get details on student and parent loan options.