by Katerina Nikolas

Created on: February 04, 2010   Last Updated: February 05, 2010

College days are expensive to finance with the rising cost of tuition fees and living costs. Most students have no option but to seek loans to pay their way through college, and whilst no one likes to start out with debt, it could prove to be a good investment for the future.

The federal government has both subsidized and unsubsidized loans available at fixed interest rates, and these will cover most of the costs needed, and most students are eligible for these loans on application. However, for many, there will still be a shortfall to be met. Savings and family assistance can still leave a gap to be filled, which is when the student must then look at private or alternative student loans.

The first rule of any financial commitment is to shop around for the best deal for you. This does not necessarily mean finding the lowest interest rate and snapping it up, as there are other important considerations to make which means studying the whole package. Luckily, these days, one does not literally have to shop around physically, as most of the research can be done online, and your college financial officers will be there to provide assistance too.

If this is your first time borrowing a large sum of money, ensure that you take the time to acquaint yourself with the financial terms attached to the loans you see, as hindsight is of no advantage when the reality of paying the loans back kicks in, and you wish you’d understood better the costs involved. There are companies which specialize in student loans, such as Chase and Sallie Mae, as well as banks which have packages set up. There are certain things you should look for in each package, as they could end up making a big difference to you.

Firstly, find out if there are any fees attached to the loan, the amounts involved, and how they are worked into the loan. The fee you really don’t want is any kind of early or prepayment penalty, as there may be times when it is possible to make a payment against the loan early, thus lessening the interest burden. Some companies offer totally fee free loans, so you only need to consider the loan amount and interest as costs to meet. They could, however, have a higher interest rate than a company which charges an origination fee or a disbursement fee. If a loan has these fees, find out the amounts, when they will be added to loan, and if they are subject to interest charges. It could be that a loan with fees may cost the same as a loan without fees, but with

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