Student loans are great because they allow you to get an education without having to worry about paying back the debt later. But unfortunately, student loans aren’t always as great as they seem.
There are many types of student loans available, and each type has its pros and cons. In this article,
we’ll go over the best student loan options and see how they stack up against each other. We’ll also cover the pros and cons of each option so you can make the best decision possible.
The first thing you need to know is that there are two main types of student loans: federal loans and private loans. Federal loans include Stafford Loans, PLUS Loans, Perkins Loans, Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct Consolidation Loans.
Private loans include Sallie Mae, Navient, SoFi loans, Credible, and Great Lakes Education Loan Corporation (GLEC).
Best student loan options
Federal Student Loans
Pros:
•Flexible repayment terms You have a variety of payment plans to choose from, including 10 year fixed rate, 5 years fixed rate, 7 years fixed rate, 9 years fixed rate, or 15 years fixed rate.
•You don’t pay interest while in school.
-Some lenders offer additional benefits, such as tax breaks, for parents who cosign the loan.
Cons:
•Interest rates on federal loans are higher than those on private loans.
•Lenders may require your co-signer to be employed or have a steady income.
Private Student Loans
Pros: Interest rates on private loans are lower than those on federal loans.
•Your credit score doesn’t matter when applying for a private loan.
•You can apply for a private loan even if you have bad credit.
Cons:
•You must repay the entire amount all at once.
•Repayment periods tend to be longer than with federal loans.
•The majority of private lenders require you to have a cosigner.
Sallie Mae Loans
Pros:
•Low interest rates
•No prepayment penalties
•You can use your earnings to pay off your loan faster.
•You can consolidate multiple loans into one monthly payment
•You can refinance your loan after graduation.
Cons:
•You must have good credit to qualify for a Sallie Mae loan.
•You cannot take out more than $5,500 per academic year.
Navient Loans
Pros:
•Lower interest rates than Sallie Mae
•More flexible repayment options than Sallie Mae loans
•Can be used to pay for any college expenses
•Allows you to borrow money for graduate school
Cons:
•Higher fees than Sallie Mae and other private lenders
•May not qualify for federal student loans
SoFi Loans
Pros:
High approval rates
•You can use your earnings as collateral.
•You can use your earnings for anything except housing costs.
•You can refinance your loans after graduation.
Cons: Higher interest rates than Salliemae and other private lenders.
Great Lakes Education Loan Corporation (GRELC).
Pros:
•You can use any part of your paycheck to pay off your GRELC loan.
•You can use it for undergraduate or graduate school.
•You can consolidate multiple loans under one contract.
Cons:
•You must have a minimum FICO score of 640 to get approved.
•You must have excellent credit history to get approved.
•If you default on your loan, you could lose all future federal financial aid.
How do I Choose?
Now that you know what the different types of student loans are, let’s talk about which ones are right for you. There are four factors that will help you decide whether a particular type of loan is best for you. These factors are:
1. How much loan debt do you want to incur? If you plan to attend an expensive school, then you should consider borrowing more money. However, if you plan to go to a less expensive school, then you might be better off taking out smaller amounts of debt.
2. What kind of repayment schedule do you prefer? Federal loans usually come with a standard ten-year repayment period. Private loans often allow you to make payments over five years or seven years. Some private lenders offer a nine-year option.
3. Do you need to borrow money for a specific purpose? For example, if you need to finance tuition, books, and living expenses, then you may be able to get a private loan through a bank or credit union. If you only need to borrow money to cover living expenses, then you might be able to get a federal loan instead.
Keywords: loan debt, Best student loan options
