Your financial aid package for your new school probably includes loans, all of which must be repaid with interest. With so many options, choosing a lender can be daunting. But if you understand a few basics, you can usually find the best loans for you.

Fill out the Free Application for Federal Student Aid (or FAFSA). This is a must. Without it, you won’t have access to federal student loans – many of which are not based on need (or your income).

Always use federal loans first, such as the Perkins, Stafford, and PLUS loans. They carry lower, fixed interest rates and often have better terms than private (or alternative) loans.

Know the difference between the types of loans in your financial aid award.

• Subsidized Stafford loans: the government pays interest while you are in school
• Unsubsidized Stafford loans: you pay interest while you are in school
• PLUS loans: loans for graduate students and parents of undergraduate students
• Private loans: loans from banks or other non-government sources, often with competitive rates.

If you need to use private loans, consider all of the costs. Private loans can have origination fees, different ways of compounding interest, and higher interest rates or higher APRs. It pays to compare.

Know your credit score. The lower your score, the higher your rate will likely be on a private loan. If your rating is poor or non-existent, you might need a cosigner. Fees and penalties can be higher than with government-backed loans and your repayment terms may not be as favorable.
New online service allows you to compare your student loan options – across 25 different lenders. Save time and money. Get the tuition process under control now.