Okay, so your scholarships and work study don’t quite cover the bill. Despair not! According to the Wall Street Journal (“Student Loans: Navigating the Maze,” May 12, 2007), you have a lot of student loan options to help you out.
Step 1:
Check with your school’s financial aid office. Many schools have negotiated discounted rates with lenders that will save you money.
Step 2:
See what Uncle Sam has to offer. Federal student loans such as the Stafford, Perkins, PLUS or Grad PLUS usually have lower interest and offer a fixed rate.
Step 3:
If federal loans are not enough, look into private (or alternative) loans. These usually come with a higher interest rate that isn’t fixed, so borrow conservatively. Also limit yourself to a few applications at a time. Applying for too many private loans at once can hurt your credit score.
Step 4:
When shopping for perks on private loans, look for discounts that are immediate and that you can’t lose. These include zero-fee loans and rate reductions that are not lost when you are a few days late on a payment.
Be wary of lenders that offer you a rate reduction after a certain number of on-time payments. Most students miss a payment at least once, which is all it takes to lose that perk for good (less than 10% of students ever actually receive the bonus). Also, by the time you actually get the discount, it will be applied to a much smaller principal amount.
Lost in Translation:
The reward language isn’t always clear. To get more details on what different lender rewards actually mean, check out Project on Student Debt.