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After calculating how much money is needed to cover the cost of college
and miscellaneous expenses, decide if you and your parents need to
arrange for a student loan (beyond the loans already offered on your Financial Aid Award Letter). Review the various types of student
loans; if you need to borrow money from a private lending
institution contact your
college financial aid office to see if your college has a “preferred
lender list." Using a lender from the preferred lender list will make processing your loan easier, however, you have the right to choose other lenders not on your college’s list.
BEWARE: Private Education / Alternative Education loans usually
cost more than federal education loans. In addition, federal
education loans offer better forgiveness and repayment options; it
is recommended that you maximize your federal
loans before resorting to Private Education / Alternative Education loans.
It is recommended to research loan benefits and incentives before selecting a lender. Go to each lender’s website and determine the cost of fees, repayment options, and other incentives. You should consider the following when selecting a lender:
- The fees for loan origination and loan guarantee.
- Possible interest rate discounts.
- Loan consolidation options and the ability to fix interest rates during repayment.
- Reducing interest rates for timely repayment and for automatic payments/withdrawals from your bank account.
- Lender’s reputation for customer service.
- Other factors.
A comparison of the Private Education / Alternative Education Loans is provided on a Loan Summary Table (scroll down webpage to see the Table).
Borrow only the amount of money you need. Over the next four
years you should borrow from only one lender so when it comes time
for repayment, there will only be one monthly payment.
For most loans, repayment begins six months after you graduate or
leave college. To calculate monthly payments for student loans,
use a student
loan calculator.
- Scroll down and enter the loan balance (Loan Amount) you expect to have when
you graduate.
- Select an estimated average Interest Rate for your loans.
- Enter the Number of Months you will take for loan repayment. Students
usually choose a 10-year (120 month) repayment schedule.
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