How to Find Loans for College
By now you have probably filled out the FAFSA (Free Application for Federal Student Aid) and learned that you are not eligible to receive grant money for college. You know that you have to get a loan but just aren’t sure where to begin your search. It all seems so complicated—interest rates, repayment options, deferments, subsidized or unsubsidized. You feel like you need a college education just to understand the terminology. Try to relax—if you made it through the FAFSA, you’ll be able to get through the loan application process.
Federal Loans
First, you should check with your financial aid office to see if you qualify for any federal loans. These loans usually have lower interest rates, longer grace periods, and various deferment options.
Private Loans
If you don’t qualify for a federal loan, you will need to research private loans. Remember that you should use this option only as a last resort because these interest rates will probably be higher than those associated with federal loans. Beware of high fees charged by some private lenders. A low-interest loan with high fees may cost you more than a higher-interest loan with no fees. Also, some lenders will give a lower rate while the student is in school and then put a higher rate into place when the repayment begins.
Student Loan Comparison Websites
While there are many helpful student loan comparison websites that are free to use, keep in mind that many of these sites do accept payment for placing lenders in their listings. The lists you get from these sites may not include cheaper loans simply because the lender does not pay the site for placement in their listings. A good student loan comparison site should meet the following:
- The site should clearly recommend that borrowers first rely on federal aid before taking out a private loan.
- There should be no fee to use the site.
- The site should take great care not make too many credit inquiries, which can negatively impact the borrower’s credit score.
- The site should give borrower’s specific interest rates and fees, not the lender’s best advertised rates.
- The results of the search should be sorted by the total cost of the loan and should present the loan that serves the borrower’s best interest first.
- The site should provide all contact information for the lender, such as web site and phone number, so that the borrower can contact the lender and apply for the loan.
