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When comparing student loan providers, one of the major decisions you'll have to make is: should you choose a federal student loan provider or private provider?
Private student loans are often issued to parents of students. They're private loans issued by banks with varying interest rates. Approval and interest rates are dependent on the results of a credit check, and there are few limits to the amount of money that can be borrowed for tuition and living expenses. Private loans also allow co-signors, which can make the interest rates even lower if the co-signor has good credit.
Federal student loans don't require a credit check. If the applicant is a low-income student, the loan can be subsidized, which means that the federal government will pay interest while the student is enrolled in school at least half-time. The government places reasonable limits on the amounts that can be borrowed each year and the variable interest rate has a cap that it cannot exceed.
So keep these points in mind before you choose your student loan providers to make sure you get the best loan for your money.
|Jennifer Mathes, Ph.D.|