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Applying for Student Loans the Right Way

College student deciding on loans

When applying for student loans, you want to ensure that you’re making the best choice for your financial future. Your education is an important investment, but not all student loans are created equal. Get educated about the array of options at your fingertips to help you to make the wisest loan decisions. Here’s an important overview of the types of student loans at your disposal, with the best choices listed first:

Subsidized Federal Loan

If you are eligible, subsidized federal Stafford loans are your best bet. All federal loans require that you are at least a half-time student. Subsidized loans are need-based; your school decides on the amount you qualify to receive. If you are eligible for a subsidized loan, the government pays the interest on the loan while you complete your education and maybe even during deferment, too! The highest interest rate for government-subsidized loans is 4.5% percent with a 23,000 dollar total loan limit. Your freshman year, you can borrow a maximum of 3,500 dollars. This number increases to 5,500 dollars for your junior and senior years.

Perkins Loan

Most experts believe that a Perkins loan is the next best thing after a subsidized federal Stafford loan. Some colleges award Perkins loans to students with extremely high financial needs. They run at a 5 percent interest rate with a maximum limit of 20,000 dollars over four years.

Unsubsidized Federal Loan

If you cannot secure a subsidized loan or Perkins loan, your next best option is an unsubsidized federal loan. Unlike subsidized loans, unsubsidized federal loans are not need-based. Unfortunately, you have to pay interest on the loan during college, or it will accrue over time. Your school decides how much you need based on other financial aid and you or your family’s income. The borrowing limit depends on your family situation — independent students can receive higher loans. The Federal Student Aid website can help you to determine whether you are an independent or dependent student.

Private Loans

If you have exhausted all of your other options, turn to Simple Tuition website as a way to find the best private loan for your needs. Financial institutions, schools, credit unions or state agencies can all make private loans. The interest rates can range from 2.75 percent to 9.3 percent depending on the market and your chosen lender. Most private loans require a cosigner with good credit. When applying for student loans, you will only receive information about the rates after completing the application.

In addition to the loans listed above, many colleges offer grants, merit-based scholarships and work-study programs. Some employers, especially institutions of higher education, will even help pay for your degree. Get creative and try to fund your college degree with minimal loans. The more financial support you receive from non-loan based sources, the easier it will be to for you to pave a debt-free future once you graduate.

The team at CESI is committed to helping you make wise financial decisions and to helping you understand your financial situation. If debt is holding you back from your future, contact us and find out how we can help.


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