Comparing College Student Loans
Which College Student Loan Is Best for You?
Comparing college student loans is not always easy, as the college student loan terms will vary. Here are some things to consider when comparing college student loans.
1. Four Important Variables
The four most important variables to consider are the interest rates, whether college student loans are subsidized or not, college student loan fees, and the repayment options.
2. Interest Rate
The lower the interest rate, the less expensive the college student loan, and the less you will repay over time.
3. Subsidized or Unsubsidized?
College Student Loans based on financial aid need are subsidized. This means that the federal government will pay the interest on the college student loan while you are still in school. This benefit makes the college student loan much less expensive for you. If you qualify, always borrow a subsidized college student loan first.
4. Fees
Most college student loans have origination and other types of processing fees. This means that although you borrow (and must repay) the entire college student loan amount, say $2,500, you may only receive $2,400 after the fees have been deducted. It is most important to keep your eyes on the fees.
Repayment Plans and Options
Some plans offer a full range of repayment plans as well as other incentives, such as interest rate reductions for an on time payment. Before borrowing a college student loan, make sure you do understand the repayment requirements and all the options.
You Will Always Pay Back More Than You Have Received
Even with the favorable terms of a college student loan, whenever you borrow money, you will pay back more than you have received. Only borrow what you must have.
Find the Least Expensive College Student Loan
Always first, try for the least expensive college student loan. The least expensive college student loan is generally the college student loan with the lowest interest rate. In order, they are:
• Perkins College Student Loan
• Subsidized Stafford/Direct College Student Loan
• Unsubsidized Stafford/Direct College Student Loan
• Private College Student Loan
If you have access to a special college, student loan program from a college or private source, first find out the terms and compare it with the above college student loans.
File the FAFSA Free Application
If you are thinking about taking out a college student loan, file the Free Application for Federal Student Aid (FAFSA). If you do show need, the college student loan will be less expensive than if you borrow outside of this need. The federal financial aid rules will help guide you since the FAFSA is required before any college can approve an unsubsidized college student loan.
When it comes to a college student loan, it is your money that will be paying it back. So, please do the homework and lots of research. It is very important for you to obtain a college student loan that best suites your financial situation. If you do not have to worry about were the money is coming from and how you will pay it back, you will do much better in school.
