Be Careful, College Loans: What' Your Options?

By Author: Jimmy Chuang
Total Articles: 21
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It is always stressful when selecting a college student loan, because there are so many different terms, options and many companies provide very attractive offers.

However, those student loans that seem "too good to be true" are generally just that, so good that something is fishy.

Every year hundreds if not thousands of college student loans are issued that look like a good deal on the surface, they end up costing thousands in fees and interest over time due to not reading and understanding the fine print before getting in a binding contact. Key things to look for in college student loans, in particular with private school or education loans include:

How the interest is calculated, as well as vague information on the loan's interest rate. It is much better to lock in your interest rate, if the pertain-able rates are good at the time, to prevent rate fluctuation. Depending on how the market fluctuates, it can either be a really good or really bad decision to lock in your rate.

Your credit score will affect the interest rate as well as the amount of money you are able to borrow. If a lender ...
... offers low rates to people with bad credit or to people no matter what their credit score is, you should be very weary of them.

They typically are adding in additional fees, costs or other services that you will end up paying for in the long run. These costs may well exceed having a slightly higher interest rate.

If a loan has a loophole to get around policies or that provides money for items not related to education, you should avoid these lenders.

This is both illegal and against the Higher Education Act policies and typically these types of scams are exposed, often too late for unsuspecting students.

Ask if the lender will sell your loan. Many of the smaller private lenders will sell your loan to someone else, leaving you with someone other than the original lender to deal with and possibly resulting in different interest rates and terms.

A reputable lender will put information about the selling of the loan in writing and will also guarantee that the original terms will continue to apply.

While it may be tempting to look at some of these newer companies offering college student loans, it is still good advice to stick with companies that have a proven track record and that have a history of working with students in a fair and responsible manner.
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