12 October 2016

Important, College Student Loans: Critical Know-how

It is always stressful when selecting a college student loan, because there are so many different terms, options and many companies provide very attractive offers.

It is very important, however, to understand that lots of the really "to good to be true" types of college student loans are exactly that.

While thousands of "good looking" college student loans are issued every year, they end up costing thousands in fees and interest over time due to not reading and understanding the fine print before getting in a binding contact. Some major factors to consider while looking for particularly private school or education loans include:

? Vague information on the interest rate of the loan and how the interest rate will be calculated over the life of the loan. If at all possible look at loans that allow you to lock in the interest rate if the rate is good at the time of the loan. Depending on how the market fluctuates, it can either be a really good or really bad decision to lock in your rate.

The amount of money borrowed and the interest rate are both affected by your credit score. If a lender offers low rates to people with bad credit or to people no matter what their credit score is, you should be very weary of them.

While it looks promising, the additional fees, other services, and costs that you end up paying are not so nice. Most commonly, these costs exceed a slightly higher interest rate in the long run.

If a loan has a loophole to get around policies or that provides money for items not related to education, you should avoid these lenders.

Not only is it illegal and against the policies of the Higher Education Act, it also typically is a scam that unsuspecting students get caught in before it is exposed.

? Ask if the lender will sell your loan. Many of the smaller private lenders will sell your loan to someone else, leaving you with someone other than the original lender to deal with and possibly resulting in different interest rates and terms.

A reputable lender will put information about the selling of the loan in writing and will also guarantee that the original terms will continue to apply.

Although these new companies offering student loans may be appealing, it is still good advice to stick with companies that have a proven track record and that have a history of working with students in a fair and responsible manner.