Not everyone has the capacity to see themselves through college. The job instability of their parents, insufficient funds, and inability to find part-time jobs pose problems for most students; thus, they are unable to finance their education. However, both federal and private institutions don’t hold back from extending help to these students. There are many lending companies willing to grant student loans to these students so they could have a chance to further their education. Nevertheless, most students are wary about getting student loans even if they know how helpful these would be. One thing that holds them back from taking advantage of such loans is slim chance of finding the best student loan rates.
These students think it would be impossible for them to find ideal rates, not knowing that the best rates normally depend on the type of loan they’re trying to obtain. One thing that potential borrowers should realize is there are different rules for rates based on which type of institution is granting the loan – government agency or private lender. Student loans sponsored by the government don’t give much freedom as far as rates are concerned. Nevertheless, their rates are significantly lower compared to that of private student loans.
Of course, when it comes to private loans, most lenders follow a rate cap, which means they can only charge private student loan rates up to a certain amount. Another factor that could affect the rate of the loan is if a student decides to consolidate his various student loans into one. Given all these, it would be a good idea for a student to examine each option carefully. Some private companies are ready to offer lower rates that rival that of government-issued loans. In the end, a student’s better judgment should guide his choices.
Many students prefer to borrow from the government (examples of such companies are US-owned Stafford and Perkins), as these loans don’t depend on a student’s credit-worthiness; thus, a student doesn’t have to go through the trouble of finding a co-signer. Just the same, it wouldn’t hurt a student to go all out with student loan rates comparison. After all, the loan is something the student might have to pay off long after he has graduated from college. Hence, discernment is important.
Choosing the type of lender with the best rate could also be influenced by a student’s course. There are educational programs that cost more than what is available through government-sponsored loans. In this case, opting for private lenders is the best course of action. However, it would do a student good to compare and compare the loan rates before zeroing in on the best one. Universities and colleges have financial aid departments, and a student would be wise enough to seek the help of counselors. These people would gladly provide free financial aid counseling. What’s more, they can help point students toward the best and lowest student loan rates.
