Look out for the pitfalls when getting a college loan. While federal loans might be cheaper than ever these days, both for young people and their parents, there are still potential problems associated with getting a loan directly from the bank. You may end up tying yourself down to huge sums of money, or else spending without the need to spend and paying for it later on in life. There are many options, but we have highlighted the best ones for you:
Federal Student Loans
These are available for those undergraduates that qualify to be subsidized by the federal government. In these cases, the government will handle the interest rate during the time you are studying and for the six months after you graduate.
There are many different states that offer different programs when it comes to lending money to students that reside or study at one of the local collages or institutions. These can be fixed rate or variable rates, with some states demanding higher rates than others.
These are perfect for the situations when the student has parents who are able to weigh in and contribute money to pay for their child’s education. A federal PLUS loan offers a fixed interest rate, but requires the payment of a small fee. Parents are able to borrow the cost of the education, but must pass a credit check first.
Private lenders should only really be consulted once you’ve considered all the government alternatives. If you have however, and either haven’t found the right loan for you or remain short of the funds required to cover the cost of your education, then a private lending institution might be a good choice. Rates can vary depending on the nature of the lender, therefore it is worth shopping around beforehand.