Which Loan Is Right For Me?
Which Education Loans Might Be Best For Me?
Yes. If you qualify for a Federal Direct Subsidized Loan (not all students do), you should accept this loan before considering others, because the loan won’t accrue interest until you cease half-time attendance or graduate. Other educational loans (Unsubsidized Direct, PLUS, CAL, and private) begin accruing interest as soon as they disburse.
Every family is different. Some parents have the ability and willingness to borrow in their own names for college costs while others do not. If your parent can’t or doesn’t want to borrow in his or her own name, you can apply for one of the other loan types such as a College Access Loan (CAL, for Texas students) or a private loan and have a parent or another credit-worthy adult serve as a co-signer.
Some families want students to begin establishing credit history while borrowing for college. This will happen if the loan is in the student’s name and the lender reports to credit agencies, as is the case with private loans. If a student is lucky enough to have parents or other relatives willing to actually pay these loans back, the student will gain positive credit history with on-time repayment. With loans in a parent’s name, like the Parent PLUS Loan, a student’s credit will not be impacted either negatively or positively.
This is a personal decision, depending on a person’s risk tolerance. With fixed rate federal (PLUS) or state (CAL, or College Access Loans for Texas) loans the rate is the same for all approved borrowers/cosigners. If you have excellent credit, you’ll get the same interest rate as someone who barely passed the credit check. It’s possible you could get a better rate on a private loan. If your credit is not quite so good, the CAL or PLUS may be a better option for you. If you have good credit, it might be worth your time exploring whether a private education loan would give you a lower interest rate (often without fee). If you apply and don’t like the terms, you don’t have to sign on the dotted line.