Accepting the first student loan you are offered can be tempting, especially when it can make the difference between attending or not attending college. However, accepting the first option that comes along can also be a big mistake and can leave you with unnecessary debt.
There is No One-Size-Fits-All Student Loan
Student loans come in all shapes and sizes. It takes time, persistence, and dedication to go through all of the options available, read through the fine print of each option, and identify those that may be the best choice for you. But in the end, the time you spend exploring your options may be well worth it.
Start with Federal Loans
As a rule, when looking at student loans, always, always start with federal loans. These offer the lowest interest rates and the most flexible repayment plans. So file the FAFSA, exhaust your scholarship options, apply for Federal loans.
Do Your Homework on Private Loans
If you do need additional aid over and above the federal student loan that you are offered, only then should you look into institutional loans and private student loans. Institutional loans are offered by the college you have applied to and private student loans are offered by banks, credit unions, and other financial entities. The interest rates and terms of institutional and private loans can vary widely so make sure you read through it carefully before making any commitment as this can have a major impact on your financial circumstances after you graduate.
Know the Elements of a Loan
If it’s your first time taking out a loan, it can be a bit overwhelming. There are a ton of factors that go into a student loan, and it can be tempting to just pick the first option to get it over and done with. But it’s really important to know what you’re getting yourself into before you sign the dotted line. Luckily, we’ve got a number of helpful student loan articles to help you get started.
- A Beginner’s Guide to Student Loan
- FAQs about Student Loans
- Student Loan Season is Coming: Here’s What You Should be Doing
- What is a “Good” Interest Rate for Student Loans?
- When is the Best Time to Apply for Student Loans?
- Student Loan Glossary: Terminology Every Borrower Needs to Know
And College Raptor has its very own Student Loan Finder, where you can compare lenders and interest rates—for FREE!