How to Choose the Right Student Loan Companies

Reviewed: August 01, 2016
By FinanceWeb

In the modern world, getting a college education is vital to your success and to get started with a good career. Going to school, though, is not always cheap, and many people have a hard time financing their educational expenses. If you can relate, then you might be wondering which student loan companies you should choose when you want the best possible results.

Before you can get a loan that is right for you, it’s important to take a look at your credit history, location and other factors. Taking out a loan is no small decision, and it can impact your life for many years.

Federal Student Loans

When looking for student loan companies, many students and their parents turn to the federal government. Federal loans often have flexible eligibility requirements and repayment terms. They are also appealing to many new students because applying for them is a simple and easy process and is usually done through their school of choice.

However, not everyone is comfortable getting a student loan through the federal government. These loans are the source of the most enforceable type of debt. If an unforeseen financial crisis renders an individual unable to pay their bills, they can often opt to file for bankruptcy. But doing so does not allow one to escape the debt of a federal student loan.

Private Banks

Private banks are a great option for anyone who is looking for great student loan companies and who meets the requirements. Although having a decent credit score is often enough for a bank to extend a loan, you will likely pay a high interest rate. If you don’t want to pay outrageous fees, don’t apply for a loan from a bank unless you have a credit score of at least 720.

Credit Unions

Many people believe that credit unions are the same as banks, but they are not. Unlike banks, credit unions are owned by its members and are nonprofit. As a result, most credit unions offer interest rates much lower than you would find anywhere else. It’s also much easier to get a loan from a credit union, but you must meet the membership requirements to apply. For example, some credit unions require its members to work for a particular company or to live in certain town or school district. But for those who meet the requirements, credit unions are a great choice when you are looking for a good student loan.

Final Thoughts

Deciding which type of student loan is right for you can be challenging. If you don’t have great credit and are not a member of a credit union, then getting a federal loan might be the choice that is right for you. On the other hand, if you have an impeccable credit score, you will likely find great rates on private loans. But remember to take the future into consideration before you make a final decision. Taking the time to make the right call will make getting your education that much easier.