What's the Best College Loan?
The best college loan is the one that fits your needs, your circumstances, your future prospects, and your character and lifestyle. If you've already spent time looking for the right loan, then you know how difficult it is.
The good news is that the information to make your decision easier is right here.
You can learn what kind and how much borrowing is right for your family from an independent source who knows how to dig beyond pretty financial aid brochures.
As you can see from the graph, the need to borrow for college cuts across all income levels.
But, the choices available may be vastly different depending on your family's resources. For instance, all borrowers would like to get student loans without cosigners at low, fixed interest rates- but most will end up settling for the government's version of these (which will create the necessity for even more financial aid/college decision-making.)
All college loans can be good, bad or ugly depending on what your individual situation is.
What may be right for a parent with one college-age child, or a good credit rating or expectations of rising earnings...
is probably not right for someone with younger children, or a mediocre credit rating or expectations of fixed earnings.
Studies have shown that students feel the pinch when they borrow more than 7% of their post-college income. Yet some authorities recommend students borrow 10-15% and suggest that parents can afford a debt ratio of 37%!
Your Best Interests Are...
NOT represented by advice from:
- financial institutions who want to get their biggest share of this $85 billion per year industry
- colleges who'd rather have students with the funds to pay (They would prefer to grow their endowments rather than deplete them.)
- the government who puts out unreadable, bureaucratic nonsense that even their people don’t understand
- high school guidance counselors who do not know any better, because they rely on information from the sources above
Student Loan Information or Misinformation?
As a professional research specialist, I am shocked by the amount of misinformation and lack of common sense that even respected organizations show.
As a parent who has been through this process twice, (with four more to go) I know that the best financial aid information is the sort that leaves you with the least college loan debt.
Loans do have some positive aspects.
A student loan can help you achieve a high credit rating.
It can also be used to repair your credit while saving you money.
If you take a smart, consumer-oriented approach to every phase of your borrowing, from researching lenders to making the monthly payments, you can transform it from the monkey on your back to a cash cow.
It all starts with your FAFSA application. With the price of college going up every year, few families can afford to ignore this intrusive form. It is your key to never-repay federal grants, your basic state grant (in whichever state you reside) institutional grants and scholarships, and of course federal college loans.
The next step is to compare all the different kinds of lenders to see what your options are. An easy way to do this, is to use the form at the bottom of this page. You will be able to see side-by-side comparisons of rates, terms and repayment without obligation.
Its more important than ever to know what to expect, so that if you do decide to get a college loan- you can make it work for you!
*National Center for Education Statistics