As a general rule, students should only consider obtaining a private education loan if they have maxed out the Federal Stafford Loan. They should also file the Free Application for Federal Student Aid (FAFSA), which may qualify them for grants, work-study and other forms of student aid. Undergraduate students should also compare costs with the Federal PLUS Loan, as the PLUS loan is usually much less expensive and has better repayment terms.
You can discuss your repayment options with your lender. If you are unable to make payments while you are in-school, you do have the option to defer repayment on your loan until you are out of school. This option will obviously cost the most money because any unpaid (accrued) interest that is not paid before the end of your grace period will be capitalized — or added — to your outstanding principal balance prior to the start of repayment.
To obtain federal student aid, you’ll have to fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA. As the name implies, the form is free and puts you in the running for financial aid for college, including federal student loans — making the whole application process easier, even if the form itself takes some time to fill out.
Fixed interest rates will stay the same for the life of the loan but usually start our higher. Variable interest rates, on the other hand, fluctuate over time according to the market rate, but typically start our lower. There is no right answer to which is the best private student loan rate type; it really depends if you think interest rates will generally increase or decrease in the future.
Say, for example, you have a couple with a combined college debt of $50,000. Annually, they are making $100,000 combined in salaries. By establishing a budget with a goal of 3-years completion, they can make the necessary adjustments in their day-to-day spending to meet that goal. This budgeting might even reveal more money they can put toward diminishing the principal balance.
Repayment options range from immediate full repayment (principal and interest payments immediately after the loan is fully disbursed), interest only (interest-only payments while you are in school, and start making principal and interest payments after you leave school), full deferral while in school, flat payment while in-school, graduated repayment (payments increase over time). COA-Aid (annual limit)
to have an outstanding balance on a Federal Student Loan received under the Direct Loan Program and not the ones under the Family Education Loan (FFEL) Program, the Stafford Loan Program, the Perkins Loan Program, the Grad Plus Loans Program, or others Federal loan programs. If you have FFEL or Perkins Loan program, you can consolidate it. Learn more about a federal student loan consolidation.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.9299999999999997% effective October 10, 2019.
Keep in mind that you should work with a lender that doesn’t charge loan origination fees, which might cancel out interest savings. It’s also a good idea to weigh the risks of refinancing federal student loans, because doing so would change them to private loans and permanently forfeit federal protections such as income-driven repayment and forgiveness options.
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