If you are looking to attend college or are already in college looking for additional funding; low interest student loans can be an ideal choice. But you need to know where to look and what to do to secure student loans at low interest rates.
The FAFSA is the Free Application for Federal Student Aid. As the name implies it is free to fill out and complete. Filling it out gives the government as well as the school an idea of what you and your family can afford for college and how much money you might need to attend college.
You’ll need to provide your status as dependent or independent, your income and your parent’s income, address, contact information, social security number, list of schools you are applying to or the one you attend, and whether you live at home or school.
Regardless of your financial status, fill this form out for each and every academic year. You may be surprised that you are eligible for grants or low interest loans. Filling out and submitting this application is the only way to get low interest federal loans if you qualify.
Choose government loans first
Private student loans should be the last resort. They should be used after all other sources of funding and financial aid have been exhausted. Government funded student loans are often far lower in terms of interest rates and issuing fees than private loans.
Plus with the U.S. government passing laws that limit and in some cases prevent private lenders from issuing and tracking federal student aid, the interest rates can be even lower than in previous years.
Government loans for students in addition to having lower interest rates than most private loans have more flexible payback options. Plus the government is willing to forgive some or all of your federal student loan debt if you take a job or military role that is eligible for loan forgiveness programs.
If you do still need additional money after all scholarships, grants, federal loans, and parental funds are factored in you may need some private student loans. Companies such as AES and Sallie Mae are well known student loan providers.
In order to get the lowest possible rates on private loans you need to have an excellent credit score (something college students may not have) and income (something else students may not have). If possible get a co-signer on your private loans such as a parent or relative. This person’s credit history and income will be considered when issuing student loans and could reduce your interest rate. But keep in mind that the co-signer becomes responsible for your debt if you fail to pay it back.
Read the fine print
Be sure to consider all of the terms and conditions for the loans you take out while in college. Look to see if the interest rate is fixed or variable; variable rates can increase or decrease at any time. Consider the repayment terms such as fees, grace periods, and maximum time to pay loans back. You need to be well aware of any changes to your loans so keep an eye on your mailbox for updates, bills, and changes to the fine print from your loan providers.