Student loans are financial aid, along with grants, scholarships, and work-study. Student loans are borrowed money that must be repaid, with interest, just like car loans and mortgages.

Even with other types of aid, many students have to rely on borrowing a loan to help cover their education expenses. Most students do not receive enough grant and scholarship funding to cover their college expenses. Approximately, 66% of financial aid funding in the state of Texas comes from education loans.

Education loans from different sources have varying terms (e.g., interest rates, repayment plans, fees, and credit worthiness requirements). For example, federal Stafford and Perkins loans have no credit worthiness or cosigner requirements and the interest rates are generally lower than other types of loans. Where as, PLUS loans require good credit and have higher interest rates.