Even after years of saving for college, many parents still run short of the college funds for their kids. The exorbitant prices of a college education have left many people to seek assistance from student loans. The culture of borrowing to cater for college expenses is so widespread that the average graduate from a public college has a debt of $28, 950. Since this is an already established norm, you can as well get the best.
What Are the Best Student Loans Today?
Numerous student loans are being floated around. Many of them share almost similar characteristics with each other. To get the best student loans available, one must be able to identify the best form the rest. Before you settle for a student loan, here are four considerations that you must look out for.
- Low-interest rates!
It is all about getting the cheapest loans out there. The education system is so expensive as it is, you wouldn’t want to add another expense on top voluntarily, would you? The best student loans to get are always the ones with the lowest rates.
- Minimal additional fees
Many student loans may look attractive at face value until you delve into the details. Some loans have very many minor hidden charges that may not seem so big at the time of application. They come mostly in the form of origination and application fees. These charges significantly increase the amount to be paid back with the loan amount.
- Fixed rates
When given a choice between a fixed and a variable interest rate, I would settle for a fixed rate any day! At least with a fixed rate, you know the amount you will be paying every month, but with variable rates, you may wake up one morning to find that inflation has blown your interest rates over the roof.
- Quality of service
Student loan providers are business people just like any other. Good customer service is key to maintaining the customer relationship. Check whether the providers offer services like deferment, debt forgiveness, and debt management help programs. Such features will come in handy should you fail to make payments in future.
Student loans can be broadly divided into private and federal student loans.
Federal Student Loans
Student loans from the federal government should always be your go-to loan. They offer the lowest interest rates, much lower than what you will get in private loans, flexible repayment options, subsidies, and forgiveness options for those who prove to be unable to make the payments.
Some of the federal recommended student loans include:
- Federal Perkins loans
- Direct Subsidized loans
- Direct unsubsidized loans
- Direct PLUS loans
Private Student Loans
With the limits placed on the federal loans, sometimes you might need extra financing in the middle of your studies. The private students’ loan comes in handy when; you have reached the maximum borrowing limit of federal loans, or you have, for some reason, become ineligible to obtain the loan. Private loans should only be taken after you have exploited all avenues of getting a federal loan. This is because of the high-interest rates charged by these lenders. Despite the generalization of the lenders, some of the best student private loans are:
- Sallie Mae
- Common Bond
Types of Loans: Compare Personal Loans with Student Loans
When it comes to financing education, you can choose any source of financing you feel like as long as you get your fees paid. There is an option of getting a personal loan as opposed to a student loan to finance your studies. Going for a personal loan as opposed to a student loan will depend on two main factors;
- Purpose of borrowing the money
If you wish to borrow money to use it partly for education and partly for other activities, then a personal loan will work for you. Student loan money is usually sent directly to the school’s financial aid office to be used to pay your tuition fees. You can only access the remainder.
- Eligibility for Students loan
Sometimes you might be interested in getting a student loan, but because of some reason, you may be deemed ineligible. In such cases, you are free to look for alternative financing to cater for your educational expenses. Personal loans have more qualification requirements and a higher interest rate than the student loans.
It is always advisable to pay for education using student loans.
What Are the Best Federal Student Loans Today?
The best sources for student loans are always the federal government funded loans. These top loans offer nothing short of the cheapest and most accessible educational funding a student can access. Some of the best college loans 2016 by the federal government include:
Direct Subsidized loans
Direct subsidized loans are federal student loans given to students who have demonstrated financial need. The interest on this loan is subsidized by the federal government. The government helps you pay the interest while you are still in school, during your grace period (six months after graduation) and whenever you differ payment. The direct subsidized loans come with an interest rate of 4.45%.
Direct Unsubsidized loans
These loans are available for students. Unlike the subsidized loans, one is not required to demonstrate financial need. The interests accrued over the differed period, grace period and school sessions are added to the principal loan amount. Just like the unsubsidized loans, the APR for the unsubsidized loans is also 4.45%.
Direct PLUS loans
Direct plus is a federal student’s loan that is offered to parents who still pay fees for their children. It is also available for graduate students and those pursuing professional studies. These loans are unsubsidized, and the interest accrues from the first month of disbursement.
The best place to apply for student loans is the federal students’ aid website. It provides all the necessary information you will need to know regarding the type of loans and qualifications required. If you do not qualify for those loans, then you can check out other private loans, preferably the ones recommended earlier on.