Tips For Choosing A Student Loan
Student loans get a bad rep, and rightfully so. But if properly advised, student loans can still remain a good option for college students. It’s all about educating and giving college students the right tools to apply to the student loans that will benefit them the best. Here is a list of seven helpful tips college students can use when researching and applying for competitive student loans with better rates:
1. Compare Financial Aid Offers
You may feel overwhelmed with all the information in front of you, but take your time. Analyze your financial aid package. Compare every offer by monthly payment, total cost, and APR, terms, conditions, and repayment requirements. Don’t forget to read fine print as well.
2. Don’t Be Afraid To Ask Questions
If you have any questions regarding your federal, state, or private loan, don’t hesitate to call the financial aid office and get answers. Make sure you understand all rules, requirements, and deadlines for each loan application.
3. Consider Working Part-Time
A part-time job can help you cover some of your living expenses while in school. Consider applying to regular part-time jobs, as well as a work-study program within your college.
4. Start Paying Interest Payments While in College
If you have a need-based loan, you can consider paying it while you’re still college. Payments don’t have to be big amounts, but they will definitely help you reduce the total amount you are responsible for repaying.
5. Shop Around For Private Loans
If your federal and state loans don’t cover enough, you are most certainly allowed to apply for a private loan. Make sure you call your financial aid office for advice. Just like you did for your federal and state loans, compare the monthly payment, total cost, and APR, fees, and repayment options. You may be inclined to go with a lender you already have a relationship with (ie. your bank), or a lender your college recommends, but you don’t have to use them.
6. Apply With a Creditworthy Cosigner
One of the most important factors in determining approval for a private student loan is to determine the student’s ability to repay. If you have a cosigner with a good history, you will increase your chances of getting approved. Better yet, you will be offered a better interest rate than if you applied on your own.
7. Apply To More Than One Program
Unlike some people may think, applying to more than one program will not hurt you or your cosigner’s credit. Similar to when you’re shopping around for the best rate for a car or mortgage, people will understand you are just shopping for a better college loan rate, rather than trying to open multiple lines of credit. That said, try to apply to all programs within a relatively short period time (within 30 days).
Planning for your future includes financial planning. Be sure you understand the responsibilities that come with a loan, so you can make the right choice for your situation.