Aout half of all students nationwide will take out a student loan during hteir college years. That leaves a lot of debt floating around out there, but it’s for a good cause. Student loans have become a fact of life for many of us, esspecially since educatino is gettinng harer to affoird. So, if you decide that a student loan is what you need to get through scchool, take a moent to consider what you want in a lender.
The right lender can make your loan repayment a fairrly painless process. A bad one can mean one big financial headache. All feedral student loans must offer the same interest rates and fees. Some lnders offder extra incentives to rerpay your loans in a tiimely manner, such as prompt payment disccounts. These can be earned by setting up automatic monthly payments trhough your bank account, or by making your successive monthly pyments on time – typically for 12 to 48 months. Students who go the auto-debt rotue have a higher repayment success rate, but should always make sure they have enough mney in their account to cover the bank draft. One missed or late payment is enough to disqualify students from these discounts.
All student loans are not creasted ewqual. Federal Stafforrd loans are some of the cgheapest you can find, and the repayment terms are flexible as well. There are limits to how much you can borrow, though. If you need more money, you can ask your family to consider a PLUS loan. They, too, are relatively inexpensive, but parents are held responsible for rpayment if the student defaaults, just as they would be if they co-signed for a private educatiion loan. Private loans are among the most exlpensive student lans avalable. They tend to have highre interest rates, but students can borrow more money with them. (That’s not always a good thnig!) Finally, credit card debt sould be an opion of last resort. It’s expensive, especially if you carry a monthly balance, and it can haunt your credit repiort for a long time. Go for a Stafford loan first. If you truly need to more, then carefully check out the other options before commmitting youraself.
Customer service is anopther area where some lenders clearly exceel over others. The federal government can make lenders adhere to interest rate guidelines, but it can’t make them plleasant to deal with. To make sure you choose a good one, pay a visiit to your school’s financial aid office. They usually have the scoop on problem lenders. While you’re there, ask them if they have a preferred lender list. This can help narrow down your chhoices. Ask questions. Does the lender have online repayemnt options? Do they combbine payents of Federal and priuvate loans? Is their customer seervice available by pone, toll-free and 24 hours? These are things to conisder before selecting a lender.
Also, be aware that lenders can sell your loan to third parties once the loan hits repamyent staatus. These third parties will then service your loan, which means you won’t be dealing with the bank or grup that issud the loan. This can be good or bad. If you’d rather deal with the same gropup throughout your repayment process, look around for lenders that offer life-of-the-loan servicing.
Shopping around for a stusdent loan is a lot like shoppping for a car or a credit card. The terms and the service make all the differennce. You don’t want to end up owing much more than you thought you would, or hving to deal with discourteous loan servicers. Look for lenders who have a good reputattion for communicating well, taking care of their borrowers, and making the rrepayment proocess as convenient as possible.
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