Student loans can be a good option
Many students find that they need to borrow money to cover college costs. Luckily, student loans often provide good deals, and financial aid officers can help with this process. Check out these tips to learn how to make taking out a loan go smoothly.
1. Compare financial aid offers
You'll have a lot of decisions to make once you get your financial aid award letters. Assess your financial aid packages by comparing offers and reading the fine print.
2. Borrow only what you need
To figure out how much money you may need to borrow, look at a college's cost, your cost of living, your family's contribution and your financial aid award. You don't have to accept the entire amount of a loan you’re offered.
3. Consider working part-time
You won't need to borrow as much if you have a part-time job to cover some of your expenses. You may even qualify for a work-study program at your college.
4. Ask questions and follow instructions
If you have any questions about how a federal loan works, don’t be afraid to contact a financial aid officer to get answers. Also, make sure you know the rules and requirements for applying for federal loans. Funds can be limited, so make sure to apply by the deadline.
5. Shop around for private loans
If you feel you need to borrow more to cover your costs, ask your financial aid officer for advice. If you decide to take a private (or alternative) loan, compare interest rates, fees and repayment options carefully. Your college may recommend certain lenders, but you don't have to use them.
6. Be clear on what you're signing
To make sure you understand a loan's terms, conditions and repayment requirements, ask your financial aid officer questions like these:
- How much will this loan cost in total?
- What will my monthly payments be?
- Is the interest rate fixed or variable?
- Can I get a lower interest rate?
- What fees do I have to pay?
7. Note private-loan credit requirements
Private loans require credit checks. If you do not have a credit history, you will need a cosigner with a good credit history and credit score. Typically, the better the cosigner's credit history and score, the better the interest rate and other terms will be.
8. Consider making interest payments while in college
You can start making payments on any need-based loans while you're in college. You don't have to pay a lot, and this will allow you to reduce the total amount you'll have to repay.
Student loans are a common part of financial aid packages.
To learn more about which loans might be right for you, read College Loans: Your Strategy.