Amid the subprime mortgage crisis and the resulting credit crunch, securing a good deal on student loans has become a herculean task for students seeking admissions to schools or colleges. Although several renowned colleges have eliminated student loans from their financial aid packages and replaced them with grants, students still need loans.
Five Ways to Get the Best Deal on Student Loans are:
1. Federal Student Loan Programs
Federal Student Loans like Perkins and Stafford for students and PLUS for parents offer a fixed interest rate,smaller fees, flexible repayment terms, an easy application procedure, and, in certain cases, a government subsidy for part of the interest. Despite the credit crunch, federal loans have fixed rates ranging from 5 to 8.5 percent unlike other forms of loans which rise and fall with the economic trends. Therefore, to get the best deal on Student Loans, Federal Student Loans are a good option.
Ensure that you submit the Free Application for Federal Student Aid (FAFSA) form to get the most suitable deal on student education loans. FAFSA is used to determine whether a student is eligible to receive federal aid like Perkins loans, Stafford loans, Plus loans, or work-study programs. The best deal on a federal student loan is offered by the Perkins program, which charges a fixed 5 percent interest rate. The next best deal is offered by Subsidized Stafford loans, charging a maximum of a fixed 6.8 percent. The Unsubsidized Stafford loans come next, which charge interest immediately but send bills only after six months of the student leaving school. There is also the PLUS program for Parents with rates capped at 8.5 percent.
3. Choose nonprofit lenders from the College's preferred-lender list
While a college's preferred-lender lists are a good place to try for the best deal on student loans, they may not always include the companies offering the best deals. In case you decide to get a loan from your college, it would be wise to choose from nonprofit lenders like MOHELA, NHHEAF, or All Student Loan. Some of these lenders can help you get the best deal on student loans by knocking off an additional 3 percent from the interest rate depending on factors like where you live and what you study.
4. Check with your respective State for Student Loans
Over 30 States offer programs to provide economic, federally backed, and other education loans to residents or in-state students. Since different state agencies have different mandates and offerings, it is always recommended to check with your home state as well as the state of the college to get the most viable deal on student loans.
5. Seek upfront discounts to get the best deal on Student Loans
Several competing lenders offer attractive discounts like rate cuts of up to 2% and partial waiver of origination fees. Scrutinize and study the various discounts offered and choose a loan that offers the maximum and best upfront discounts, such as complete waiver of both origination and default fees.
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