Finding a fixed rate student loan is always ideal when compared to variable rate loans. This is even more so when the student loan in question has a low rate of interest. Finding a loan that has a low rate of interest and a fixed one at that can end up saving you thousands of dollars in the long run.
So as a potential applicant what are your options when it comes to finding the perfect student loan? Firstly like we always recommend, a student loan must be your last options always. Look into scholarships and grants and only turn to a loan if you cannot meet your required expenses with a scholarship of a grant of some kind.
Assuming you’ve done your homework and looked at all funding options and now have to get a student loan, here is what you need to do. You are better off getting a fixed rate student loan. The best option to get a fixed rate loan is to look into federal student loans. Federal loans are ideal for students that meet the eligibility requirements and also work if you have a bad credit or no credit. It is for this reason that people with low or bad credit try to get a federal loan to fund their education.
Before we look into the different federal student loan options, here are the eligibility conditions that you must satisfy to qualify for a federal loan
- Be a US Citizen or an eligible non resident.
- You must have a high school diploma or it’s equivalent.
- Get through your college entrance exam.
- Have a social security number.
Your options for a federal loan are
Each link gives you more details about the eligibility, requirements and detailed information regarding the loan. Do note that each loan is different and have different requirements and eligibility criteria. Also, the PLUS loan is a loan made to the parents of an undergraduate student and not directly to the student. However this is an option that you must explore if your situation merits it.
Apart from federal student loan, your only other option is private student loans. Private loans are completely dependent on the financial institution making the loan. You will find a variety of choice among the different banks and credit unions that are out there offering these loans. Remember to look carefully at the rate of interest and push for a fixed rate of interest. Don’t be swayed by a lower variable rate of interest because pretty soon you will find that rate of interest climbing and yourself in a sticky situation. Personally I prefer knowing what is my outflow is each month and ideally would like to keep it constant which I can if my loan is a fixed loan.
Take the time to research and understand all the fine print before you make up your mind. After all you will be stuck with your student loan for a fairly long time. Spending some time doing due diligence and ground work now will end up saving you a lot of money in the future. Good luck.
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