With education being expensive, it is almost inevitable when it comes to applying for a student loan. The recent study shows in the record; there are 44 million borrowers who cumulatively owe a total of 1.5 trillion student loan debt.

The idea when taking out a student loan is that upon completion of your studies, you will get a job to finance the debt. Choosing student loans should be seriously taken as you will be required to pay them once you are financially capable. Interest rates and repayment period are some of the features to look out for in student loans.

Federal student loans should be a priority

Before seeking out private student loans, apply for federal loans. There is a security that comes with them. They are flexible in that there is a provision for extending your grace period depending on your reason.

Federal loans often are limited to how much you make monthly which makes it a flexible option for you.

Types of federal student loans

  • Direct Subsidized Loans- these loans are for students who demonstrate financial need and interest is not charged until after graduation.
  • Direct Unsubsidized Loans- the school particularly decides how much you can borrow depending on attendance costs and any other financial aid. Here, they charge interest even when you are in school, but there’s an option of deferring the interest until you graduate.
  • Federal Perkins- the loans are subsidized and have low-interest rates. They are only for students who are in significant need of financial help. They offer a grace period of nine months upon graduating.
  • Direct PLUS- these particular ones are unsubsidized and are for graduate students or professional students (Grad PLUS) and parents of undergraduates (Parent PLUS) who need more money. Interest rates are often higher, and they don’t have a borrowing limit.

Private Loans are also an option

Sometimes, federal student loans may not be enough, and you may need to apply for a private student loan. Numerous companies are offering such loans such as Commonbond, and the best way of settling on them is knowing their terms.

As much as you can choose any lender, some schools have a preferred list. Most of these loans need you to have a cosigner due to the lack of credit. Therefore, choose a cosigner who has an excellent credit score to increase your chances of approval and getting better interest rates.

Deferring Interest

For private loans, you have an option of paying the loan interest while still in school or deferring until you graduate and you can comfortably pay then.


Student loans have an option of refinancing as long as you are not in default. Refinancing can be a great option if you look at the terms and see that you could get a better interest rate and loan repayment period with a new lender. However, consult an expert before refinancing to see if it’s the right decision.


Private lenders often have more flexibility than federal loans when it comes to restructuring your loan. This is mostly so because you have an option of refinancing with any other private lender. There are also options for an interest rate reduction.


Interest rate

Everybody wants to pay the minimum they can on their student loans. When interest rates are high, the total cost of the loan is higher. A variable interest rate may not necessarily be a cheaper option because the rate may increase over the years and you end up paying so much more than taking a fixed interest rate plan.

Student loan calculators can help create an estimate of how much you’ll have paid once you take out different student loans. Don’t be in a hurry to pick a loan offering variable interest rates before having an idea of how much you will pay at the end of your repayment period.

Loan fees

For federal loans, the loan fees are non-negotiable. However, for private loans, some companies may offer a loan without charging loan fees. Before deciding on what to go for, consider the total cost and see what will work for you.

Cosigner release policy

When taking a private student loan, ask about their cosigner release policy. This is a policy when a cosigner can be released from the loan they cosigned.

As a student, your cosigner can only be released when you meet specific requirements such as:

  • Graduating from college
  • When you make some minimum full monthly payments between 12-48 months
  • If you are employed and earn a particular minimum income

Always ensure that you make monthly payments on time to prevent the loan affecting your cosigner’s credit score.

Student loans are lifesavers as they help you study seamlessly. When you take out private student loans, get those that are flexible enough in the case that you lose your job or a tragedy occurs.