Which Student Loan is Best for College

There are two types of student loans: federal and private. Federal student loans are offered by the federal government, and private student loans are given by private lenders. In order to decide which loan is best for you, learn more about how each loan works.

Federal Student Loans

When you’re looking for student loans to pay for college, always start with Direct Federal Student Loans. They offer a great set of benefits, including long periods of deferment and forbearance, as well as income based repayment plans and public service loan forgiveness for those who qualify.

There are three types of federal student loans. They are all different in their own ways, but they all have the same goals: provide assistance to students so that they can successfully pursue higher education.


If you are a graduate student or the parent of a college student, a PLUS Loan is likely an excellent option for you. This federal loan will help you pay for your higher education with affordable monthly payments and flexible repayment options.

A Direct Subsidized Loan

A fixed-rate federal student loan with a lower interest rate. For these loans, the government pays your interest while you are in school or have deferred your plan, which is great for those who are struggling financially.

A Direct Unsubsidized Loan

A fixed-rate federal student loan with no need for financial need. Interest builds up when you are in school, when your grace period is in effect, or if you are deferring or forbearing.

Private Student Loans

Private student loans are those offered outside the federal classification. When we talk about private student loans, we’re talking about loans that are not federally offered. These loans are most often provided by private lenders, banks, and credit unions. You might not know it, but loans are also often offered by schools.

School loans are the best option for some students. However, not all schools offer them. Institutional loans often offer a lower interest rate and more favorable terms than what is widely available when compared to traditional lenders. If you’re not able to find help for your student loans, don’t give up. Ask your school if they have any scholarships or institutional loans that may be available.

What Can You Use Student Loans For?

You can use student loans for education-related expenses. But what exactly does “education-related” mean?  The following item are almost always acceptable:

  • Tuition
  • Fees
  • Books
  • Computers
  • Housing (on or off campus)
  • Housing Supplies
  • Transportation
  • Groceries
  • Child Care

This list is not complete as many items that could be considered education-related are not listed here. There may be some confusion about what you can and cannot use the loan for. If there is any question about whether an expense is related to your education, refer to your school’s tuition and fees breakdown or talk to someone at your college. Depending on your major, degree, or other circumstances, some less-obvious costs may qualify as well.

Tips For Student Loans

Compare, compare, compare! Just because a lender offers a lower interest rate, that doesn’t mean it’s the right choice for you. Please take into account the benefits that lenders offer as well as their interest rates. Shop around for the best loan for your circumstances.

When you take out a student loan, make sure it is what you need — not more. You may be tempted to borrow more money than your budget allows, but do the hard work to determine the amount you really need instead. If you are just finishing your undergraduate degree, consider how much your years in school will cost. The total should be something that you are both comfortable with and able to pay back.

Don’t sign anything without reading it thoroughly. We know you might think we’re lecturing, but it’s important. Contracts are the promissory note, and when you sign it promises how much you’ll borrow and what happens if you can’t repay it. It’s important to know what obligations come with borrowing money, and you want to minimize surprises.

If you are borrowing to pay for school, it’s important to be aware of the interest that is being accrued while you are in school. You can pay this interest while you are in school, but if you do not have the money the unpaid interest will become part of your principal balance when you enter repayment. Making any payment towards the loan while in school could help decrease the overall cost significantly.

After you’ve finished your studies, consider refinancing your student loans. You might qualify for a lower interest rate, and it might mean making monthly payments that fit your budget better. There are many options available, and you should explore them before putting another dollar into your student loans.

Student Loans Summarized

Paying for college can be scary. But it’s possible with the help of loans. Remember, both subsidized and unsubsidized can help pay for school. Each with different terms and conditions. For example, one type might come with an interest-free period, while others might charge interest. So think about your budget and pick the repayment option that suits you best.

Apply for an Installment Loan Today

Shop around to find a lender that offers the lowest rates along with the best repayment terms.

Getting started is easy. Fill out the online application and wait for it to be processed and approved. Bad credit or no credit? You can still apply and get the cash you need!