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| Student Loan Choosing |
 Selecting the Cheapest Rate
It may sound apparent to recommend selecting the cheapest financing option available, but Mark Kantrowitz, publisher of finaid.org, says frequently students do not. "A lot of students will select private loans because the student has the obligation for repayment, even though prior to the change in rates PLUS loans were cheaper," he says.
Most loans require a parent co-signer, even if the loan is technically in your name. In other words, parents are on the hook - so it will be better to choose the cheapest deal. Kantrowitz also stresses the importance of accurately calculating the cost of education. Keep in mind that tuition costs are likely to grow each year, so multiplying the cost of tuition for your freshman year by four will not be right.
When looking at private loans, consider all of the costs associated with them - such as origination fees and the ways in which interest will compound over time. And make sure that you're comparing the lowest rate that you will qualify for with every organization, which may differ from the lowest rate on offer based on factors such as your credit.
Lucrative Loopholes
If federal rates remain the cheapest option, being savvy can help you save.
"Once you have been in school for two years, consolidate your PLUS loan every year," Kantrowitz says.
Although the PLUS loan is now fixed at 8.5 percent, the maximum interest rate for consolidated loans is capped at 8.25 percent. By consolidating, you'll save a quarter percent.
Kantrowitz also affirms you'll lessen the amount of dough that the government believes you can afford to spend on college - known as your Expected Family Contribution, or EFC, on the Free Application for Federal Student Aid (FAFSA) - by decreasing the amount of money in your name on bank and other accounts.
Every Bit Counts
John Hadeed, a senior studying business management at Fordham University in New York, is keeping his loans in check while he's in school by paying just the interest every month.
"If I waited until I was out of school to begin paying, my loans would have risen by several thousand dollars simply in interest," he confirms. While in school you may not be able to pay much - that's the reason for the loan - but small payments like this can result in a big difference over time.
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