Your Student Loans Questions Answered

The costs of higher education may seem discouraging, but with a little research student loans can be a manageable option to fund your degree.

4 min read

After four years of high school, clubs, volunteer work, and many college applications, you’ve decided to invest in an education—but, how are you going to pay for it? There are options to finance your education and many questions involved. Wherever you choose to begin your college journey, N26 is here to help you. Our mission is to empower you to make smarter financial decisions now to set you up for financial success down the road.

Let us walk you through common questions around student loans to help you start your research journey.

How do student loans work?

In general, there are two types of loans you can apply for: federal and private. Regardless of which you choose, you’re expected to pay them back over time with interest. Before you navigate the process of applying for a student loan, read on to understand how they work and what to consider before you borrow.

How do I get a student loan?

The federal loan application process starts with filling out a Free Application for Federal Student Aid (FAFSA) when you apply to a school. Upon admittance to college, you’ll receive a financial aid package with information regarding your loan amount. If you choose to apply for a private loan, your lender will evaluate your credit and debt-to-income ratio to determine your eligibility. You may require a cosigner to qualify.

What are my loan options?

Federal or private? Subsidized or unsubsidized? There’s a lot to consider when taking out a student loan. For most students, your best bet is likely a federal student loan. Subsidized federal loans are intended for undergraduate students with financial need and cover interest while you’re in school. Unsubsidized federal loans, the most common type of undergraduate and graduate loan, start to accrue interest immediately. If you still have remaining costs after you’ve received your federal loan, consider a private lender to cover any excess financial burdens.

At some point you’re going to have to give back what you’ve borrowed, so it’s important to consider your options for repayment now. Federal loans offer a standard 10-year repayment plan, income-driven plans, extended payment, and more. Private loans don’t have as many options, but some lenders utilize deferment or forbearance as options. As your financial situation changes, so can your repayment plan.

Is a government loan the best option?

Federal loans provide more advantages than private loans. They have fixed interest rates, offer a deferment period (re: borrower doesn’t have to make payments when he or she is enrolled in school or unemployed), and don’t require a credit history or co-signer—to name just a few. The first step in applying for this type of loan is to fill out a FAFSA when applying to schools.

What’s next?

Ask for help. Talk to a lending professional. Take your parents or a friend and get advice from someone who speaks the language and can explain things to you. Don’t know where to start? Your new school’s financial aid office can help explain your options.

Don't take more than you need. Avoid borrowing more than you need so you’re not saddled with unnecessary debt. You may be offered a certain amount of student loan money, but know you’re not obligated to take the full amount. Instead, research and reflect on your actual needs. Consider applying for grants and scholarships, working part-time, and cutting lifestyle costs wherever possible. Your future self will thank you.

Set money aside early. Even if it's $5 or $10 a month, set money aside for when it's time to repay your loans and get ahead. With N26 Spaces you can personalize, track, and achieve your long-term financial goals. Set a savings target, select an icon, and transfer money in or out of your Spaces instantly with just a few swipes.

Looking for an account you can trust to get your finances started? Open an N26 account in 5 minutes directly from your phone to experience banking with:

  • No hidden fees: That’s right – no minimum account balance, no maintenance fees, and no foreign transaction fees when you use your N26 card abroad.

  • Early payday: Get your paycheck up to 2 days earlier with direct deposit.¹

  • Savings goals you control: We designed Spaces to help you reach your goals at your pace. With Spaces, you can drag and drop money instantly to achieve your personal goals, big and small.

  • Free ATM withdrawals: Say good-bye to ATM fees. Use the ATM locator in the N26 app and enjoy unlimited free ATM withdrawals at 55,000+ Allpoint locations.

  • Exclusive discounts and cashback offers: Experience the ultimate music streaming platform with TIDAL, or brush up on your skills with online courses from Udemy. Learn more about our Perks program and full list of partners here.

  • Automated spending stats and limits set by you: Learn what your spending habits say about you with spending statistics and prevent overspending by setting limits for yourself with just a few taps in the N26 app.

¹ Faster funding claim is based on a comparison of our policy of making funds available upon receipt of payment instruction versus the typical banking practice of posting funds at settlement. Fraud prevention restrictions may delay availability of funds with or without notice. Early availability of funds requires payor’s support of direct deposit and is subject to the timing of payor’s payment instruction.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

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