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 to the 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
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. Be particularly careful with any variable rate loan based on the LIBOR index, as that index will be expiring in the near future!
Deferment & Forbearance Options
Use this list to compare your options and then make a chart of 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 and Download RISLA's Guide to College Borrowing.