[Read 7 Ways Private Student Loans Are Getting Better]
Before shopping for private loans, students and parents should first apply for federal student aid, including low-cost government loans, lenders say. (First step: fill out a Free Application for Federal Student Aid.) Unlike private loans, federal student loans offer fixed interest rates as low as 4.5 percent, easy repayment terms, and the possibility of forgiveness for public service.
[Read about cheaper, easier federal student loans. ]
Students who need more than the federal government’s student loan maximums should consider cutting their costs or switching to a cheaper college instead of borrowing more, many financial aid officers suggest. Students who owe more than the $31,000 total maximum the government lends to undergraduates through the Stafford program can find it difficult—and occasionally impossible—to make their monthly private student loan payments. And they have little hope of relief, since bankruptcy courts rarely erase educational debts. (MORE)
