How to Pick the Best Student Loan for You

Finding the best student loan is like comparing apples to oranges.

Flickr user frankieleon

You’ve chosen your school for the fall, but now it’s time to choose your student loan. The application process and knowing the pros and cons of each type are the most important when it comes to picking which one is right for you. Here’s a rundown of some of the steps to take and things to consider.

Starting the Application Process

 The first step to obtaining financial aid is filling out FAFSA and CSS, or the Free Application For Federal Student Aid, as completely as you can. This will give you a complete picture of the assistance you will receive from the federal aid department and give you a clear idea of how to move ahead. You can always accept or decline any loan the Department of Education offers you.

Federal Loans

 After your FAFSA is submitted, you will generally receive an estimated loan amount within just a few days, which is determined by your school’s decision, tuition, cost of living, and a few other factors depending on the loan.

If you are in need of financial assistance based on your family’s income, you will want to pay special attention to any direct subsidized loans or federal Perkins loans you are offered. Both are dependent on you demonstrating financial need in your application. Direct subsidized loans will have no interest added while you attend school, making it a popular and less expensive choice. Perkins loans are not offered by every school, but they are reserved for situations of extreme financial need.

You may also be offered direct unsubsidized loans. These are a great choice if the financial based need loans weren’t enough to cover your finances or you didn’t demonstrate financial need at all. Interest will begin immediately. If the previous examples still weren’t enough, you may want to consider and talk to your parents about direct PLUS loans, purely designed for parents of undergraduates. They will have higher interest rates, but no borrowing limit.

A federal loan in general are preferred to a private student loan, as it tends to be easier, cheaper and simpler to repay, and have plenty of repayment options. However, you may be limited in what you can borrow and it may not be enough.

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Private Loans

Private loans should generally only be considered when federal loans aren’t enough to cover your tuition, supplies, and cost of living while attending school. Before choosing a private loan that works for you, it is essential to figure out exactly how much you will need to fill the gap. You don’t want to end up paying more than you have to.

Shop around and compare fees, terms, interest rates, and any other potential costs before settling on a private loan. However, it is important to talk to your parents as you will most likely need a co-signer with good credit to be eligible for one of these.

Private loans are perfect if you do not qualify for federal loans, and they may come in handy as larger amounts are available to you. If you do plenty of research, you may also be able to find low interest rates with a good repayment plan.

Choosing which student loan is right for you depends entirely on your financial need and situation. It is highly recommended you consider federal loans before seeking private loans due to their repayment options, low fixed interest rates, easy repayment, and other benefits. Carefully weigh your options after you receive your offers from the government and use a loan calculator to see if private loans are absolutely necessary.

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Lender Rates (APR) Eligibility
Citizens logo.
6.97%-15.03%* Variable
5.99%-14.00%* Fixed
Undergraduate and Graduate
Sallie Mae logo.
6.37% - 16.70% Variable
4.50% - 15.49% Fixed
Undergraduate and Graduate
Credibe company logo.
4.98% - 16.70% Variable
4.07% - 15.66% Fixed
Undergraduate and Graduate
Lendkey company logo.
6.07% - 11.31% Variable
4.39% - 10.39% Fixed
Undergraduate and Graduate
Ascent company logo.
6.22% - 16.08% Variable
4.09% - 15.66% Fixed
Undergraduate and Graduate
6.54% - 11.08% Variable
3.95% - 8.01% Fixed
Undergraduate and Graduate
Earnest company logo.
5.62% - 18.26% Variable
4.11% - 15.90% Fixed
Undergraduate and Graduate
4.98% - 12.79% Variable
8.42% - 13.01% Fixed
Undergraduate and Graduate
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.