What Is a Student Loan?
A student loan is money borrowed to pay for education costs such as tuition, fees, books, and living expenses, repaid with interest after school or on another agreed schedule. In the United States, loans come either from the federal government, with terms set by law, or from private lenders, with terms set by the lender.
Federal vs. Private Loans
Federal loans have fixed rates set by law and offer options such as income-driven repayment. Private loans are credit-based and their rates and terms vary by lender.
Interest Accrual
On some loans, interest builds up while the student is in school; unpaid interest can later be added to the principal, which is called capitalization.
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🔗 Related Terms
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- APR (Annual Percentage Rate)
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- Balloon Payment
- Buy Now, Pay Later (BNPL)
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.