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| Choosing Student Loan |  Looking for good possibilities to finance your education? Then it's high time to go shopping - to look at a variety of loan options, that is. As interest rates on federal college loans rise and shift to fixed rates, experts say it's more desirable than ever to accurately calculate the cost of your education, take into account all of your financing options and intelligently choose the ones that will be cheapest over time.
Investigeting Options
"A popular mistake students make when it comes to college loans is lack of knowledge" says Raza Khan, president and co-founder of MyRichUncle, which provides private student loans. " Most students take the first loan option they're proposed, because the challenge seems daunting."
But as of July 1, 2006 federal college loans, which were based on market rates before, have moved to fixed interest rates. For the PLUS loan, that means an interest rate of 8.5 percent, and for Stafford loans, 6.8 percent. Khan says, that private loans may become a better option if market interest rates go down.
Khan says that even if federal loans remain the best deal, the education is so costly that most students need to supplement the federal loans they're proposed with private ones. In such situation, he informs, "the loans which a university advises may not be the cheapest financing option available."
A recent "60 Minutes" investigation revealed that some universities proposing students particular financing options were receiving kickbacks from the organizations financing the loans. Investigate all of your options to be sure you're getting the cheapest interest rate, including loans advised by your school and those available from other sources.
MyRichUncle, for instance, proposes a variety of loans tailored for particular needs, such as those customized for students who need cash to live on when they complete unpaid internships or are studying abroad at international institutions. Recently, the company start offering pre-prime products, which lend to students who lack credit – and as a result would usually have a hard time securing loans - based upon unconventional factors such as academic performance.
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