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What kind of loans are best to search for?

When applying for loans to finance college, which types of loans are best to apply for? Will there be more competition for the subsidized loans? #student-loans

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Rachel’s Answer

This can really depend on your circumstances and can change as the market changes, my best advice to you is to see if your school or your city offers free loan counselling before you sign anything. My personal experience has been best with fixed rate loans that are government issued - I had a mixed of subsidized and unsubsidized, as well as private loans. Subsidized loans were nice as the government paid the interest while I was in school, but I was also not able to get quite as large of a loan going the subsidized route. Private loans can be tricky because they can be harder to consolidate and do not currently apply to most student loan forgiveness programs.


Another thing i would advise you to keep in mind is the type of rate you see on the loans. With a variable rate loan, your rate may start out very low, but it can fluctuate greatly over the life of your loan, increasing your monthly payments and the overall cost of the loan. I,for example, had one that started around 3.6% that is now up to 5.3%, and could end up much higher before I'm through paying it off. Some variable interest rates cap out at 8 or 9%, some have no cap at all, so I would advise you to check that out. Fixed interest rates were better for me and the way I pay my bills. It was a bit higher than the variable rate options at the start, but now i know over the life of the loan it will remain the same regardless.


I hope that helps, but if you need any more information, please feel free to follow up. I personally made a lot of mistakes with my student loans, not thinking the process through and am now paying roughly $1,000/month in student loan debt. Be cautious and thoughtful when making these decisions. It may not seem like a big deal now to take out a few extra grand, but keep in mind the amount you take out now is only a fraction of what you will have to pay back - think about your budget now, the salary you can expect to make when you get a job in your chosen field, etc. You are doing a great job already in doing your research and asking good questions, keep it up!
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Donnell’s Answer

Student loans can come from the federal government or from private sources such as a bank or financial institution. Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources. You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time. If you have trouble repaying your loan, you may be able to temporarily postpone or lower your payments. You may be eligible to have some portion of your loans forgiven if you work in public service.

Here's a quick quick read for more info:
https://studentloanhero.com/featured/how-do-student-loans-work/
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