- So you've made the decision
to get a student loan, or several.
Deep breaths, because the student loan process
can be just a little bit overwhelming.
So in this video, I'm going to be covering
how to find the best student loans and rates,
and what type of factors you should look into
before you sign up for one.
Hey guys, welcome back to The College Investor,
the place for investing
and personal finance for millennials.
Today, we are talking about student loans
and all of those little pieces that go into it.
Now, back in the day,
there weren't really a whole lot of options,
and it seems, now,
you can just do a quick search on the internet
and you'll come up with a million options.
So, first, you'll wanna make sure you understand
the difference between federal versus private loans.
If you are signing up for federal student loans,
understand that those rates, those interest rates,
are locked in by the government.
Now at the time of this recording,
direct subsidized and unsubsidized loans for undergraduates
is at a 2.75%,
which is some of the lowest interest on student loans
in a long time.
So, if you've either already exhausted
your federal student loans,
or you're looking to receive additional outside resources
using private student loans,
and then there's a couple of key factors
that you'll wanna make sure you review before you sign up.
The first thing is, you want to look into interest rates.
Obviously, the lower the interest rate, the better.
Next, you wanna look at your loan term.
The terms can range anywhere between three to 25 years,
and those terms simply means,
that's how long you have to pay back that loan.
Next you'll wanna make sure
that there are no origination fees.
Then take a look at your repayment plan options,
forbearance options, any bonus offers that,
maybe there's a discount if you sign up with them,
and then no prepayment penalties.
Basically a prepayment penalty would be,
they would charge you a fee
for paying off your student loans early,
you definitely don't want that.
The whole goal is to pay off those student loans
as quickly as possible.
So make sure there are no prepayment penalties.
Then lastly, you'll wanna take a look at
their co-signer options.
If you're a new student,
you're more than likely going to need a co-signer
to sign up for these private student loans.
So take a look at those terms
and how they factor in to the overall cost
of that private student loan.
That's why we really enjoy recommending Credible.
It's a great tool that compares multiple private lenders
and shows you very quickly, in just a couple of minutes,
exactly what kind of rates you can get
all within one resource.
In fact, doing a quick search on Credible's homepage,
you can quickly see the types of private lenders
that they work with,
and then get an idea of their different rates,
fixed or variable.
Now the fixed interest rate is going to stay the same
throughout the life of the loan,
whereas variable, it may be lower at a 2.7%,
but just keep in mind, over time,
that interest rate can fluctuate up and down.
So you wanna make sure that if you sign up
for a private student loan with variable interest,
know that that interest rate can change and likely go up.
Then you can quickly see their loan terms,
and then, if you can use those loans
for undergraduate or graduate degrees.
Credible makes it really easy just to figure out exactly
what kind of private student loans you can get
and what those rates are.
Now, as much as we like them,
they don't have every option available,
so continue to do your research.
And as you are researching
and getting some rates put together,
understand that you will have a soft pull and a hard pull
of your credit.
So, when you're researching
and getting these personalized rates,
banks are going to do a soft pull on your credit,
which isn't really going to hurt your score
if you're doing it in a short amount of time.
Now, when you apply and do a formal application,
you're actually gonna go through
with this particular lender,
that is when they will do a hard pull of your credit score.
So understand the differences.
Then also, make sure you understand
when to apply and submit your application.
If you're wanting to start college in August,
it's recommended that you fill out your application 30 days,
at least 30 days prior to starting.
So that means, you should have those applications
ready to go, everything's locked and loaded,
30 days out before you start college, at minimum.
So our quick picks
for the best private student loans out there
that we've researched include, Credible, Earnest,
Ascent, SoFi,
LendKey, and CommonBond.
What's great about these lenders is that,
often, many of them
do not have any application fees or origination fees.
They're really easy to work with.
The platform is very easy to understand.
Now, if you're wanting to dive deeper
into each of these lenders,
then be sure to check out our complete review of each one
on thecollegeinvestor.com.
As with everything related to paying for college,
there is an order of operations
that we recommend you follow,
and that starts really with getting free money
that you don't have to pay back,
so that scholarships and grants, first and foremost,
that should be your first avenue for paying for college,
followed by your own income, your parents' income,
anytime you can cashflow.
Student loans really should be a last resort,
and private student loans aren't for everyone.
Private student loans is actually at the bottom of our list
when it comes to financing and paying for college.
So be sure you understand the pros and cons.
If you want more information on how to pay for college,
side hustles, student loans, and more,
be sure to check out thecollegeinvestor.com.