As discussed in this week’s earlier Project Debt Relief post on student loans, a college education is expensive – there is no changing that – but luckily student loans can help ease some of the burden while you are in college.
The way that student loans for college work is simple. You basically take out a loan like any other that is then used primarily to cover tuition. Many students also extend their loans to cover other expenses such as books, room and board, and food. Most student loans don’t require you to pay any money back on them during your schooling – that is saved for later. Once you graduate, you are then required to pay the loan back in its full over the course of a set period of time.
The big catch with student loans is interest. That’s why it pays to seek out the top student loans possible. These top student loans come with much lower interest rates so you are not paying through the roof on a loan that you needed to get an education and a well-paying job in the first place.
Luckily, you can find student loans with low interest rates. Keep on reading to find out how.
How to Find Low Interest Rate Student Loans
Finding a low interest rate student loan starts with research. Nearly everyone recommends that students looking at these types of loans start the research process long before they need to finalize their loans. This gives them the chance to scout around, look closely at proposed terms, and finally settle on an agreeable loan with a lender.
Many students also turn to the aid of a financial aid counselor, which can be found working for most schools around the country, or a credit counselor to help get their finances in order. Older students, those not attending college straight out of high school, tend to turn to credit counselors in particular for help sorting out their financial life as they have had more time to already rack up debts and so on. Brand new students with little debt or credit tend to do just fine listening solely to the advice of a financial aid officer.
What Makes a Great Low Interest Student Loan?
There are many things that make a great low interest student loan. Want to know the biggest? A low interest rate!
While that might seem extremely obvious, I bet you would be surprised at just how many students end up getting wrapped up in the other specifics of a loan and tend to overlook their actual interest rates. For instance, many people see a lengthy payback term and opt for this increased long-term security over a low interest rate. This plan tends to backfire on these students as they end up paying much more than they need to (because of interest) while paying back their loans over a long period of time.
A great low interest student loan is generally a federal loan as well. Student loans are usually broken up into federal and private. Federal is usually the best way to go.
The reasons for this are numerous. However, federal student loans almost always come with lower interest rates and all around better terms. Federal student loans are more focused on allowing students to pay back their loans with ease. It is worth noting though that private student loans, though having higher interest rates, offer students the option of changing the terms on their student loans if they need to.
Low Interest Student Loans Without a Cosigner
Because many younger college students, especially those enrolling directly out of high school, don’t have credit built up, it can be very hard for them to find the lowest interest rates for student loans without a cosigner.
The biggest thing for you to do if you are stuck in this situation is talk with a financial advisor at the college you are going in to. They will help you find the lowest interest student loans that do not require a cosigner.
Much of the time these sorts of loans are federal loans. In fact, the lowest interest rates for student loans without a cosigner can generally be found in much the same way. If you can’t cover all of your education expenses with federal student loans, chances are you can find a private lender who understands you and your situation. It is not uncommon for first year college students to have little or no credit. Most of the big lenders will understand that you are going to college so that you can have money some day in the first place! Just give yourself enough time and don’t give up and you are sure to find a willing lender in no time at all.
Finding the lowest interest rates for student loans is a very important part of the college application process. While it will not directly affect your admittance to school, it does pay to have a solid financial plan in order for your school career. So give yourself enough time to investigate all your options, talk with and gain guidance from a financial counselor, and look at federal student loans first. You will find a student loan with a low interest rate in no time at all.