Student Loans: 3 Things To Consider Beyond Just Interest Rates

Interest rates are the first criteria many students use when choosing a student loan and that’s understandable. The rate of interest your loan attracts plays a key role in determining how much your loan will ultimately cost you by the time you finish paying off the principle and the accrued interest. However, the interest rate is not the only factor that affects the total cost of your loan. There are a few other factors that also affect the total cost of the loan and ignoring these can be a huge mistake.

When looking for student loans, these are a few other things you must consider in addition to the interest rates.

The Source Of The Loan

All students who are U.S. citizens or permanent residents are entitled to apply for federal student loans, which are funded by the U.S. government. This should always be your first preference. In general, federal loans have lower rates of interest and more flexible terms as compared to private student loans that are funded from individual entities such as banks, or credit unions.

Federal student loans have standard terms and interest rates. Private loans may vary considerably from one loan to another, depending on various factors. Even if the private loan seems more attractive, you should explore it further before accepting it. Did you find a private loan that seems too good to be true? There is usually a catch hidden in the fine print. Read the fine print, understand it, and ask questions. Get all clarifications in writing before you accept any private student loan.

Repayment Period

The repayment period plays an important role as the interest rate when determining the total cost of the loan. A standard repayment plan involves repaying the loan and interest over 10 years. This is through monthly payments spread out equally over that time. In addition to the standard plan, most loans also offer other repayment options to suit various financial scenarios.

Before accepting any loan, you must find out if you can choose from different repayment options depending on your financial circumstances. If the terms are rigid and you cannot change your repayment options, you may want to reconsider accepting the loan. Getting pinned down to one repayment plan without the option to change could work out to be very expensive for you over the life of the loan.

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Several loans offer borrowers various solutions by way of consolidation, refinancing, deferment, or forbearance if they are struggling to make their monthly payments. Each of these options works differently and each comes with its own pros and cons. Look into them before choosing which will work best for you. However, what is important is that each of these options can help stave off the worst-case scenario. In other words, going into loan default. Knowing that you have recourse to these alternatives can be a huge relief. If a loan is rigid in that it does not offer you these solutions, it may not be worth accepting it, no matter how attractive the rate of interest.

Use College Raptor’s new Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to find the ideal student loan—for FREE!


Lender Rates (APR) Eligibility
Citizens logo.
6.36%-14.25%* Variable
4.48%-13.29%* 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
4.09% - 15.71% Fixed
Undergraduate and Graduate
Lendkey company logo.
5.84% - 11.11% Variable
4.39% - 11.11% Fixed
Undergraduate and Graduate
Ascent company logo.
6.16% - 16.09% Variable
4.09% - 15.71% Fixed
Undergraduate and Graduate
6.54% - 11.08% Variable
3.95% - 8.01% Fixed
Undergraduate and Graduate
Earnest company logo.
5.62% - 16.20% 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.