If you are in need of a loan for college, it is important that you understand how to compare your options in order to get the best deal for your family.
Students typically should borrow Federal Direct Subsidized and/or Unsubsidized Loans before seeking a loan elsewhere. These loans have low fixed rates and the most flexible repayment options on the market. If your family applied for financial aid, these loans would have been included in the student's financial aid award letter.
However, federal student loan options have annual borrowing limits and unfortunately, for many families, the amounts aren't enough to cover the total amount they need to pay for college. That is where other options come in and when comparing becomes necessary.
The remaining loan types fall into three major categories: federal, state-based, and private.
Additional Federal Loan Options
State-based Education Loans
Rates and fees vary from program to program. View and compare RISLA's student loan programs.
Private Student Loans
Factors to compare on student loans
What is the interest rate on the loan? Is the rate fixed or variable? A lower rate is better, but be careful to pay attention to other factors too. For example, a low rate on a variable rate loan may not be low in a few years when you enter repayment. Assess your family's appetite for risk before taking on a variable-rate loan, and make sure you understand how the index that rates are based on can change over time. Not only affecting your rate but also your monthly payment once repayment begins.
Annual Percentage Rate (APR)
Deferment & Forbearance Options
Next, ask about whether the loan can be deferred again if the student re-enters school after graduation or takes a break. Lastly, find out what the forbearance procedures are and how much time you can get if you can't make payments due to your financial circumstances.
Use this list to compare your options and then make a chart of the pros and cons before deciding which is right for you. Need more information on college financing? Book an appointment with RISLA's College Planning Center .