Selecting college student loans is always a bit of a stressful time, there are so many options, so many different terms and even some very attractive looking offers.
However, those student loans that seem "too good to be true" are generally just that, so good that something is fishy.
Every year hundreds if not thousands of college student loans are issued that look like a good deal on the surface, but without reading the fine print and understanding exactly what you are getting into you may find out you have cost yourself thousands of dollars in interest or fees over time. Key things to look for in college student loans, in particular with 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. It is much better to lock in your interest rate, if the pertain-able rates are good at the time, to prevent rate fluctuation. Depending on how the market fluctuates, it can either be a really good or really bad decision to lock in your rate.
• Your credit score will affect the interest rate as well as the amount of money you are able to borrow. 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.
• College student loans that promise you money for non-educational items or that indicate they have a loan that falls in a loophole to get around the policies.
This is both illegal and against the Higher Education Act policies and typically these types of scams are exposed, often too late for unsuspecting students.
• 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, a proven track record with a positive history of previous students is a much better option to choose.
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