Bucks: How to Shop for a Student Loan (if You Must)

In this weekend’s Your Money column, I talk about the new fixed-rate student loans that U.S. Bank and Wells Fargo are offering.

It’s nice that borrowers can now choose among fixed and variable rates, just as mortgage shoppers can. But it’s lamentable that this product even needs to exist. It would be better if college didn’t cost so much. And federal loan limits probably ought to be higher, so that fewer students would need to take on additional, higher-interest debt from banks.

Still, it is what it is, and some families will insist on borrowing money beyond what the federal government lends so that their children can attend whatever expensive school they like. So the rest of this post is for them.

Shop around.

Shop around, shop around, shop around.

Tim Ranzetta of the consultant Student Lending Analytics realized a year ago that lenders might well quote you wildly different rates once they’ve examined your application.

Try lenders like Sallie Mae, Wells Fargo and U.S. Bank. Check to see if there is a nonprofit agency in your state that offers a better deal. And call a few local credit unions to see if they have student loans. Check out the preferred lenders, if any, that your college suggests you work with, too.

Then, repeat as necessary each and every year, since your credit score and the lenders’ rules and pricing will probably change.

And kindly report your shopping experience below.

Article source: http://feeds.nytimes.com/click.phdo?i=c2490e93293f4b84e257fd5b81e62bdb