Treat your student loan like any other financial transaction — shop around for the best deal before making your decision.
You can use Bankrate's student loan marketplace to compare interest rates and repayment terms from many of the country's top lenders. Explore your options by checking out at least two or three potential lenders.
3. Get input before deciding.
Talk it over with your family and guidance counselor. If you have friends already in college, ask them for recommendations on getting a student loan. Find an online forum and see what your peers are saying.
When you're ready, you can apply for your student loan online — quicker and easier than you might think — and get the money you need for college.
What are private student loans?
Student loans come in two types: federal student loans and private student loans.
Private student loans come from private lenders. This includes banks, credit unions, or online lenders. Federal student loans instead come from the federal government.
Borrowers must qualify for private student loans. When you apply, private lenders will examine your financial history and credit score. If you don't have an established credit history, you may not find the best loan.
Before you begin
Before you consider a private student loan, research available grants and scholarships. It's usually free to apply, and you won't have to repay any funds you receive.
Next, consider a federal student loan. Federal student loans come with fixed rates and income-driven repayment plans. Loans are designed especially for undergraduate students, graduate students, or parents. Once you've exhausted those options, private student loans can help fill any gaps.
Use Bankrate's student loan marketplace to examine many of the country's top lenders. Compare interest rates and payment terms to find the best loan for you.
Terms you should know
When you apply for a student loan, you'll come across industry-specific terms that may not be familiar. These terms can directly affect the terms of your loan, so be prepared:
APR: Short for Annual Percentage Rate, this term refers to the amount of interest added to your loan every year. If you have a good credit score and/or a positive financial history, lenders typically offer lower APRs.
Co-signer: A co-signer agrees to step in and repay the loan if you default or fail to make payments. Adding a co-signer can help reduce a loan's APR. Co-signers can be parents, siblings, or family friends. Be sure that your co-signer has a good financial situation, or you won't see as much of a drop in APR.
Fixed or variable interest rates: Private student loans come with two types of interest: fixed or variable. Fixed interest rates remain the same from month to month. They're fixed, and do not change for the length of the loan. Variable interest rates can change from month to month. Independent factors, such as the economy, set their monthly rate.