Figuring out how to pay for college can be overwhelming. However, it is extremely important that you find the best student loans for you if you're financing your education. Finding the best rate on a student loan could easily save you thousands or tens of thousands of dollars over the life of your student loans. Here's what you need to know.
1. Apply for Financial Aid for Federal Student Loans
It is extremely important that you fill out a Free Application for Federal Student Aid (FAFSA) to see if you qualify for federal student loans. Federal student loans often offer some of the lowest interest rates available for most college students according to Federal Student Aid, a part of the U.S. Department of Education. If you qualify for subsidized federal student loans, you won't have interest accruing while you attend school. Unfortunately, any unsubsidized loans you use to finance your education will accrue interest while you attend school.
2. Consider Private Student Loans
It never hurts to investigate private student loans even though Federal Student Aid suggests federal loans offer the best rate on a student loan for most students. In some rare cases it is possible to find a private student loan program that is a better option financially. There are many lenders and different private student loan programs to choose from, so it is important you do your homework and shop around for the best private student loan for your situation. Make sure you understand the differences between federal and private student loans in detail before making a decision as private student loans do not offer the same options and protections as federal student loans.
Private student loans are also an option when you have already borrowed the maximum amount of federal student loans but still need funds to pay for college. If this happens, make sure you have a plan to repay your loans after you graduate before you borrow additional funds. Many college students do not understand the true impact student loans will have on their finances after they graduate. Borrowing an unmanageable amount of money using private student loans as an additional means to pay for college could end up being a major regret later in life when a less expensive college or university could have been chosen.
3. Get a Co-signer with Amazing Credit
If you decide to get private student loans, you may not be able to qualify for the best private student loan rates on your own. As a student, you may not have had the opportunity to establish a great credit score yet. In order to get the best private student loan rates, you should consider getting a co-signer with excellent credit. Getting a co-signer is a serious decision and one which the co-signer should not take lightly. If you do not repay the student loan for any reason, the lender can and almost certainly will require the co-signer to make payments on your behalf.
No one wants to spend their precious time shopping for student loans. Just remember, your future self will thank you if you're able to find the best rate on a student loan and save yourself thousands of dollars in the process.