If you’re like one of the thousands of individuals considering student loans to help pay for your education, you know you have several options. Picking the right loan can make a huge difference when it comes time to repay your debt. Before you borrow, you should do your research to choose the best loan for your needs. In honor of National College Decision Day on May 1st, the experts at BHCU share several different student loans, and how to pick the right one for your situation.
How to Choose the Best Student Loan
There are two different student loan options to choose from—federal loans (government) or private loans (from banks or credit unions). If you’re unsure what type of loan to select, first research federal student loan options. A federal direct loan offers a low-interest rate, multiple repayment options, and borrower protection and is generally the safer choice for students.
The different types of federal loans include:
- Direct Subsidized – A federal loan for undergraduate students with demonstrated financial need. The borrower won’t be charged interest while in school, and payments don’t begin until six months after leaving school.
- Direct Unsubsidized – A federal student loan that isn’t based on financial need and any undergraduate or graduate student can get. You are charged interest while in school, and the amount you can borrow is based on attendance costs and financial aid.
- Direct PLUS – Credit-based federal loans for graduate or professional students and parents of undergraduate students. Interest rates are higher than other federal loans, and you must pass a credit check to receive this loan.
To qualify for a federal student loan, start by completing the FAFSA form. The Free Application for Federal Student Aid form must be completed each year to be eligible for loans, grants, and scholarships. After submitting your FAFSA form, the government sends a copy to each school you applied to, and the university then determines your aid package. You will receive a financial aid award letter outlining your gift aid and any loans you’re eligible to receive.
Selecting a Private Student Loan
Choosing a private loan lender can feel overwhelming, but it doesn’t have to be! A private loan is offered through banks, credit unions, or lenders. Students often need a parent or guardian to co-sign. Many borrowers with strong credit history opt for this loan option because lenders may allow for larger amounts to be borrowed. Private loans tend to be more expensive than federal loans, so you should shop around for the best offer. At BHCU, we offer credit union student loans through our partnership with Sallie Mae. Get the money you need for school with loans created specifically for undergraduates and graduate students and their families that include competitive interest rates, no origination fee or prepayment penalty, and multiple repayment options to help meet your specific needs.
Why Choose BHCU for All Your Needs?
If you’re still wondering how to choose the best student loan option for your financial needs, the experts at BHCU are here to help. When scholarships, grants, and federal aid isn’t enough, know that our student loans offered through our partnership with Sallie Mae can help you get the money you need to further your education. To learn more about our services, contact us today at 610-595-2929.