Photo credit by Al Scandar Solstag
There’s no doubt about it – college can be expensive. Luckily, though, there are plenty of ways you can be helped out financially. One of these ways is to get a student loan. On this topic, there is some good news and some bad news. The bad news is that there are literally hundreds of companies which all compete very closely in this market and trying to get a good deal is sometimes extremely difficult. The good news is that this competition will drive down prices amongst the more legitimate companies, and this article is here to help you make the best, most informed decision whilst you’re thinking about applying for a loan for school or college.
The first important thing you need to know is that often, the amount a company will give you, if at all, may depend on the course you’re doing. Very often loan companies are more willing to lend money to students who are studying at medical school and are interested in pursuing a career relating to medicine. This is because there are governmental and legal advantages in these companies in doing so, and as medicine can become quite a lucrative career, they know that they will get paid back well.
The second important thing you need to know is what exactly a student loan is. They can come in a variety of shapes and sizes, but the most common option available is a loan which will cover tuition fees and everyday college expenses such as housing, off campus housing, transportation, cars, new computers, books and most all other school related expenses such as travel and study abroad. The companies who offer these loans mostly offer extremely good rates (because of the extremely competitive industry, mentioned above) and could also offer you other incentives, such as cash back schemes and money off and discount vouchers & cards.
Generally, pupils should only think about getting a loan for private education if, and only if, the Federal Stafford Loan (FSL) has been maximized. They should also submit the Free Application for Federal Student Aid (FAFSA), which may allow them grants, work-study and other forms of student aid. Undergraduate students should also try a comparison of costs with the Federal PLUS Loan, as the PLUS loan is usually a lot cheaper and on the whole its repayment terms are a lot more flexible.
Be careful, though: the cost of a loan can significantly increase with the charges imposed upon you by the lender. A loan that boasts a fairly modest interest rate but that contains sneakily high fees can, at the end of the day, result in more expense than a loan with no fees and a significantly higher interest rate. As a general rule of thumb, 3% to 4% in fees is about the same as a 1% higher interest rate.
In addition, be cautious of a comparison of loans with dissimilar terms of repayment, as a loan with a longer term will have a lower APR, even though the total amount of interest paid is significantly higher.