College Finance

Know your Lender

Watch for Unexpected Costs.

Don’t let anybody pressure you into signing before you’re satisfied you’ve gotten a fair deal. If things don’t look right or the numbers aren’t adding up in your favor, take a break.

Here are a few areas you should investigate before applying for any loan:

Bank or Credit Union: 

While both offer Private Student Loans, member-owned credit unions may offer lower rates and fewer fees than for-profit banks.

Variable or Fixed Rates: 

Low introductory rates often make variable rate loans look like no-brainers. Yet because they’re “variable,” that low, low rate will likely move up and down over time. Your lender is required to show you the highest interest rate possible on a variable rate loan—so be sure to check that out—and research rate fluctuations over recent years.

Before signing on, look very closely at how much you might be paying if rates go up.

Prepayment Penalties:

Make sure there’s no penalty for paying off your loans early. If you come into money or want to refinance your student loans with another lender, you don’t want to get hit with higher rates or other penalties. (Federal law prohibits prepayment penalties on most Private Student Loans, but you’ll want to ask before you apply.)

Credit Issues:

If you or your parents have a poor credit record, or none at all, you might be asked to pay higher interest rates—or not qualify for a loan. If the poor credit is all yours (and hey, you’re young so this could be the case), you can have a parent or other family member or friend cosign for a Private Student Loan.

Tip:  Check your credit rating before you start the application process. There may be some simple things you can do to improve your credit score — and lower your borrowing costs.

Created and compiled by Rachel Rue, cuLearn and a talented writer/editor

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