Questions to ask about student loans if you need to borrow.

By now, you probably have been accepted to college and you know where you are headed to this fall. But have you decided how you are going to pay for your education? As a rule, always take advantage of any available scholarships and grants, and pay what you can from salary and savings before turning to student loans.

If you do need student loans, federal loans are often your best bets. If you have submitted a FAFSA and have financial need-based eligibility for a subsidized federal loan, your school will include this loan in your aid package.  Any student that has submitted a FAFSA can become eligible for an unsubsidized federal loan which accrues interest while you attend  school unlike the subsidized loan. However, these federal student loan programs have annual borrowing limits and additional funds may be needed.

If you still need to borrow more after exploring federal loan options, you may want to consider a State-based lender, such as the RISLA Student Loan or RISLA Parent Loan. Be sure to compare the Annual Percentage Rate (APR) of any private loans before applying.  The APR includes the interest rate of the loan as well as any mandatory fees, so you get a true cost of the loan, including all finance charges. Remember to limit the amount you borrow! For every dollar you take out, you will have to pay back more than that dollar with interest. 

Before you borrow, always ask the lender: 

1. What is the interest rate? and APR?
2. Is the interest rate fixed or variable? (Variable rates can change monthly or annually until your loan is paid off.)
3. Is the rate I receive based on my credit?
4. Does the interest rate ever change? (Some loans have different rates while you are in school vs. after you graduate and start repaying your loan.)
5. What are the fees? (repayment fees, origination fees, default fees, late payment fees, etc.)
6. What is the loan term?
7. What would my monthly payment be if I borrowed $X,XXX?
8. When would my first payment be due?
9. How are loan funds disbursed? (to you or the school?)
10. What steps do I need to take to complete an application?
11. How long does it take to process an application?
12. Are there loan limits? Annual? Aggregate?
13. Who is eligible for this loan?
14. Do I need a cosigner?
15. What deferment and repayment options are available to me?