College is expensive, and for most students, this will result in them taking out a student loan. However, not only is getting approved stressful but so is finding the best one that works for you.
There are many loan providers to choose from, and it can become overwhelming when searching through all of them. Especially since most have to run your credit, you may not want to apply to a bunch in a short period.
Before you pick a loan to apply for, here are some tips on how to find and choose the one that may work best for you.
Know the Loan Options You Have
While student loans all have the same purpose to help pay your tuition they don’t all fit under the same category. There are multiple types of loans, but eligibility is what differentiates them from one another.
Direct Subsidized: These loans are based on your financial needs and do not build interest while you are in school. This loan is specifically for undergraduate students, and eligibility will depend on your financial information with FASFA.
Direct Unsubsidized: Unlike a direct subsidized loan, undergraduate and graduate students can both apply for this loan no matter what financial information is given to FASFA. However, you do get charged interest while in school, so it is best to start paying it sooner than later.
Direct PLUS: This loan is directed towards the parents of undergraduate students or graduated and professional students. However, unlike the subsidized and unsubsidized loans, you must pass a credit check to be approved for this loan type.
Private: These loans are offered by banks and credit unions and generally need to be cosigned by a parent or family member for approval. Searching around and finding the best deal is important before selecting one.
Knowing the difference between each loan and seeing which one best fits your criteria is essential to limiting the amount of financial burden they’ll bring you in the future.
Do Your Research
Once you pick out the right loan, you should do some research to know which options within that group fit you best. For most students, they may have to go towards private loans if they do not qualify for the other options.
The biggest factors to compare within a loan are the repayment options, repayment terms, and interest rates. These three sections should be thought out through long-term and shorter periods so you understand how the full picture will impact you.
Picking a longer-termed loan will help you manage your monthly payments but will also cost more overall. However, shorter-term loan payments will allow you to pay back your debt sooner but the monthly payments will be bigger.
Also, while you most likely will not be fully paying back your debt all at once, picking the lowest interest rate is most beneficial for you financially when looking at the two other factors as well.
Reading Loan Reviews
While not every loan is the same when comparing them to one another, there may be a previous borrower of theirs who is in the same boat as you financially. This is where you will want to read the reviews that are left to get a full-picture understanding of what you are signing up for.
Loan providers will advertise themselves in a positive light to try and have you sign up with them over their competition, but unfortunately, not everything will be positive about them. Reading reviews will tell you about the good and bad experiences that previous or current loan borrowers had with the provider.
This will help you get an unbiased insight into what you will be getting yourself after signing up and taking out the loan. You will most likely be dealing with that provider for years to come, so knowing the most is beneficial to you long-term.
Hard Work Now for Ease Later
It is no secret that student loans are not an enjoyable topic or financial situation to get into. However, by doing your research, you can lessen the financial burden that comes along with them in the long run.
It is also important to remember that you are not alone in this journey. There are financial experts, financial aid officers, and college counselors who can direct you to the right resources and providers to look into based on your financial situation.
Student loans are not the best, but they do provide help with your college tuition, which will allow you to strive toward the future you want. No matter where you are in your scholarly journey, there is no wrong time to do your research when you need it.