How to Choose a Student Loan
Lender
If you choose to use student loans to finance your college
education, they will be a fundamental part of your financial
life for years to come. That's why it's important that
you choose a student loan lender you can work with for the
duration of your loan. As you evaluate your student loan
choices, there are some key factors to keep in mind.
Approval Method
Most private student loan lenders consider income and credit
history to approve you for a student loan. If you have a
poor credit history or low income, or both, you will likely be
required to have a co-signer. Without a co-signer, you
will have to seek other loan options.
Federal student loans can be obtained without credit or
income contingencies. You must fill out a FAFSA, Free
Application for Federal Student Aid. You can get a copy
of the application from the financial aid office at your school
or fill it out online at www.fafsa.ed.gov.
Loan Terms
The terms and conditions of the loan will be one of the
primary factors you use to choose a student loan lender.
Loan terms include things like amount of the loan, interest
rate, whether the interest rate can increase and when, grace
period, under what conditions you can default, etc.
Different lenders offer different terms with the loans they
offer.
You should choose the lender with the loan terms that will
allow you to have the lowest cost over the life of your
loan. If possible look for lenders that offer a fixed
interest rate. This way, you don't have to worry about
your interest charge fluctuating from one month to the
next.
Repayment Plans
The hardest thing about a student loan is repaying it.
No matter what you expect your income to be after you graduate,
you'll never know until you reach that point. It's best
to choose a student loan lender that has a variety of repayment
options.
Forbearance and Deferment Options
You may incur financial difficulty at some point in the life
of your student loan. Forbearance and deferment options
give you the ability to temporarily postpone your student loan
payments. It's good to know that you'll have one less
bill to worry about until you get back on track. Without
any forbearance or deferment options you'll be forced to
continue making student loan payments if you have financial
hardship. Find out each lender's options for forbearance
and deferment as well as the criteria for qualification.
As you consider student loan lenders, think about each of
these factors. Decide which factors are most important to
you and look for a lender that offers the best terms in that
category.
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