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First, before you begin taking out loans, research scholarship and grant opportunities. This is funding that you don't have to pay back and will help you lower the amount you have to borrow.

CMU offers a wide variety of scholarships for new and continuing students, some that are renewable each year. You also can find scholarships through third-parties, so look hard.

If you do have to borrow money, you are able to apply for student loans by filling out a FAFSA (Free Application for Federal Student Aid). Once you complete this application, the Department of Education and CMU determine which aid you are eligible to receive.

There are two types of student loans from the federal government: subsidized and unsubsidized. For subsidized loans, the government pays the interest while the student is in college or in deferment. With unsubsidized loans, interest begins accruing as soon as the loan is taken out.

Sometimes, you may need to take out an additional loan to cover other school-related expenses. This is only advised when absolutely needed. Consider your needs and balance it with what you will have to pay back in interest.

There are federal loan limits. Undergraduate students who are listed as a dependent by their parents or guardians cannot borrow more than $31,000 in federal loans (subsidized and unsubsidized). Independent students cannot borrow more than $57,500, and graduate/professional students cannot exceed $138,500.

Once you receive your loan, it is deposited into your student account and will automatically pay any balance, such as tuition and textbooks.  

If the amount of the loan exceeds your account balance, you will receive a refund. However, even refunded money is borrowed, so it needs to be paid back. A helpful tip would be to use any refund to make a payment on one of your loans.

While you are in school and at least half time, your loans will be in deferment, meaning you don't have to make payments at that time. However, some loans will be accruing interest even in deferment. You can still make payments on loans during deferment. If it's possible for you to do, it would help reduce the amount of total interest accrued. 

To see what you owe in student loans, you can visit the National Student Loan Database System. It will also show the interest rates on your loans, how much interest has accumulated and how much you have borrowed.

If you graduate or drop below half-time status, your grace period before you have to start making payments will begin. For subsidized, unsubsidized and PLUS loans, the grace period is six months.

Before your grace period ends, you will be contacted by your loan servicer to begin payment arrangements. The four major loan servicers are FedLoan Servicing (PHEAA), Navient (SallieMae), Great Lakes Higher Education Corporation & Affiliates, and NelNet.

In some cases, you may qualify to have your federal student loans forgiven. There are loan forgiveness programs for teachers, veterans, those who are employed by a public service organization and in some cases, those with low incomes.

Forgiveness options can range from certain amounts to your entire loan balance. Some may require payment of interest and/or income taxes on the balance being forgiven.

For a full list of loan forgiveness programs and qualifications, visit the U.S. Department of Education’s Federal Student Aid website.

If you find yourself in a situation where you cannot make payments on your loans, you will want to contact your loan servicer and make alternative arrangements, such as switching to a different payment plan.

You also can request a deferment. This is a period of time where you are not required to make payments on your loan(s). During this time, the federal government will pay the interest on your subsidized loan(s).

You still will be responsible for any interest that accrues from unsubsidized and PLUS loans. There are deferment requirements you will need to meet. Contact your loan servicer for additional details or to arrange a deferment.

Another option is asking for a forbearance. A loan forbearance is a period of time where your loan(s) are temporarily delayed or reduced. The difference between a forbearance and deferment is that during a loan forbearance, you will be responsible for all the interest that accrues on your loans. There are eligibility requirements for forbearance to be eligible. Contact your loan servicers if you need to arrange a loan forbearance.

If a payment becomes nine months late, you will default on your federal loan. There are severe penalties for going into default, including collection costs, wage garnishment, social security garnishment forfeiting of income tax refund and serious harm to your credit.

If you have defaulted on a federal loan, there is a way to solve the problem. It can take up to nine months to fully rehabilitate your loan and get back on track.

If you are in default on Federal Direct Loans, you can contact the Department of Education’s Debt Management and Collection Service office, and they will assist you in finding out which collection agency is in charge of your loans.