Pursuing higher education is a significant investment in yourself, but it can also be financially daunting. Choosing the right student loan can have dramatic impact to your financial situation with $28,950 owed per student on average.1 Thankfully there is a range of student loans which are catered towards your personal situation. To view the best student loans available this year start an online search today.
What You Need To Know About Student Loans
Understand the Different Types of Loans
The first step in choosing the right student loan for you is to understand the different types of loans available. There are two main types of student loans: federal loans and private loans.
- Federal loans are provided by the government and offer several benefits, such as fixed interest rates, income-driven repayment plans, and loan forgiveness programs.2 Federal loans also do not require a credit check, and the interest rates are typically lower than those offered by private lenders. To apply for federal loans, you will need to complete the Free Application for Federal Student Aid (FAFSA).
- Private loans, on the other hand, are provided by private lenders such as banks and credit unions.3 Private loans may offer variable interest rates, and the interest rates are typically higher than those offered by federal loans. Private loans also often require a credit check, and the eligibility requirements may vary from lender to lender.
Consider the Interest Rate
The interest rate is a critical factor to consider when choosing a student loan. The interest rate determines how much you will ultimately pay for your loan over its lifetime. Federal loans typically have fixed interest rates, meaning that the interest rate remains the same throughout the life of the loan. Private loans, on the other hand, may offer variable interest rates, which means the interest rate may change over time. It’s important to understand the terms of your loan and how the interest rate may impact your payments over time.
Evaluate Repayment Options
Repayment options are also essential to consider when choosing a student loan. Federal loans offer several repayment options, including income-driven repayment plans that adjust your monthly payments based on your income and family size. Private loans may also offer repayment options, but they may not be as flexible as those offered by federal loans.
It’s important to understand the terms of your loan and the repayment options available to you. For example, if you take out a federal Direct Subsidized Loan, you may be eligible for an income-driven repayment plan that caps your monthly payments at 10% to 20% of your discretionary income, depending on the plan you choose. However, private lenders like Discover may not offer income-driven repayment plans but offer deferment and forbearance options to help you temporarily postpone payments.
Read the Fine Print
Before you choose a student loan, it’s important to read the fine print carefully. Make sure you understand the terms of the loan, including the interest rate, repayment options, and any fees associated with the loan. Some loans may have origination fees or prepayment penalties, which can increase the cost of your loan.
Compare Loan Options
it’s important to compare loan options before making a final decision. Take the time to research and compare different lenders and loan products to find the best fit for your needs. There are many websites and resources available to help you compare student loans, such as the U.S. Department of Education’s Federal Student Aid website, which provides detailed information about federal student loans, as well as a loan comparison tool to help you compare different federal loan options.
4 Private Student Loans To Check Out
- Sallie Mae: Sallie Mae is a well-known private student loan lender that offers a variety of loan options with competitive interest rates and repayment options. They also offer benefits such as interest rate reductions for on-time payments and automatic debit.
- Discover: Discover is another popular private student loan lender that offers competitive interest rates, no fees, and flexible repayment options. They also offer a reward for good grades and a reduced interest rate for automatic payments.
- Wells Fargo: Wells Fargo is a major private student loan lender that offers competitive interest rates and flexible repayment options, including interest-only and deferred repayment plans. They also offer interest rate discounts for certain accounts and customers.
- Citizens Bank: Citizens Bank is a private student loan lender that offers a variety of loan options with competitive interest rates and repayment terms. They also offer benefits such as interest rate reductions for on-time payments and the ability to release a cosigner after a certain number of payments.
Find Your Perfect Student Loan This Year
If you’re a student who is ready to take on a student loan but is confused by all the information out there don’t worry. Taking in many factors of your personal situation there are a range of student loans which are catered to help you get educated without carrying a massive bill over your head. To view the best rates and options for student loans this year start an online search.