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While college can be expensive, there are thankfully several strategies that could help you pay for the upcoming fall 2021 semester. However, there are also a few pitfalls that could end up costing you more money along the way.
Here are four big mistakes to avoid when paying for college (and what to do instead):
- Not filling out the FAFSA
- Not applying for scholarships and grants
- Not taking advantage of federal student loans first
- Not comparing rates on private student loans
1. Not filling out the FAFSA
The Free Application for Federal Student Aid (FAFSA) is used by students (and their parents) in order to receive government financial aid for college. The FAFSA helps colleges and the U.S. Department of Education evaluate your financial need and determine how much financial aid you’re eligible for.
If you don’t fill out the FAFSA, you could be missing out on thousands of dollars in financial aid and federal student loans to help you pay for college.
What to do instead: Make sure to complete the FAFSA as early as possible so you can take full advantage of any financial aid you qualify for. Fill it out even if you think you might not be eligible — after all, you could end up qualifying for aid you weren’t aware of.
Keep in mind that you’ll need to fill out the FAFSA before the deadline — you have until June 30, 2022, to submit the form for the 2021-22 academic year.
Learn More: How to Apply for FAFSA 2021-2022: Deadlines, Tips, and FAQs
2. Not applying for scholarships and grants
Unlike student loans, college scholarships and grants don’t have to be paid back — which makes them an excellent way to pay for college. There are thousands of these awards available to college students each year, which means you’ll have to spend some time researching and applying for whichever ones you might be eligible for.
This could feel intimidating, so you might be tempted to skip the process. But doing so could cost you what’s essentially free money to use for school.
What to do instead: Set aside plenty of time to research and apply to as many scholarships and grants as you can — there’s no limit to how many you could get. Some potential organizations that might offer these awards include:
- Local and national businesses
- Nonprofit organizations
- Professional associations in your field
Also keep in mind that you might qualify for federal grants or school-based scholarships according to your FAFSA results.
To get started, consider using sites like Scholarships.com or The Scholarship System to easily search for scholarships and grants that you might be eligible for.
Check Out: How to Get a College Scholarship
3. Not taking advantage of federal student loans first
Federal student loans are backed by the U.S. Department of Education and offer unique perks that you won’t find with private student loans. Some federal student loan benefits include low interest rates, income-driven repayment options, and access to student loan forgiveness programs.
There are also private student loans available, possibly even from your own bank or credit union. But if you’re considering federal vs. private student loans, keep in mind that private loans don’t come with the same protections as federal loans — which is why it’s generally not a good idea to rely on them before taking advantage of any federal loan options you have.
What to do instead: Take out federal student loans first if you need to borrow for school. This way, you’ll have access to all of the protections that they offer.
To apply for federal student loans, you’ll need to fill out the FAFSA. Afterward, your school will use your FAFSA results to determine what federal student loans and other federal financial aid you qualify for. You can then decide which aid you’d like to accept.
Learn More: Federal Student Loans Guide: Subsidized & Unsubsidized Loans Review
4. Not comparing rates on private student loans
After you’ve exhausted your scholarship, grant, and federal student loan options, private student loans could help fill any financial gaps left over. These loans are offered by private lenders that set their own interest rates and terms. These rates also vary based on market conditions.
Because there are a wide variety of lenders that provide these loans, it’s important to compare your options from as many of them as possible. This way, you can find a loan and interest rate that best suit your needs. If you don’t, you might end up with a higher interest rate that could greatly increase the cost of your loan — possibly by hundreds or even thousands of dollars.
What to do instead: Be sure to compare as many lenders as you can to find the right loan for you. Consider not only
student loan interest rates but also repayment terms and any fees charged by the lender, and eligibility requirements.
Keep in mind that you’ll typically need good to excellent credit to qualify for a private student loan. If you’re struggling to get approved, you can improve your chances by applying with a cosigner. Even if you don’t need one to qualify, having a creditworthy cosigner could get you a lower interest rate than you’d get on your own.
If you decide to take out a private student loan, Credible can help — you can compare your prequalified rates from our partner lenders in the table below in two minutes.
Lender | Fixed Rates From (APR)
| Variable Rates From (APR) | Loan amounts | Loan terms (years) |
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
3.69%+10
|
5.66%+10
| $2,001* to $400,000 | 5, 7, 10, 12, 15, 20 |
- Fixed APR:
3.69%+10
- Variable APR:
5.66%+10
- Min. credit score:
Does not disclose
- Loan amount:
$2,001* to $400,000
- Loan terms (years):
5, 7, 10, 12, 15, 20
- Repayment options:
Full deferral, fixed/flat repayment, interest only, academic deferment, military deferment, forbearance, loans discharged upon death or disability
- Fees:
None
- Discounts:
0.25% to 1.00% automatic payment discount, 1% cash back graduation reward
- Eligibility:
Must be a U.S. citizen or permanent resident or DACA student enrolled at least half-time in a degree-seeking program
- Customer service:
Email, phone
- Prequalified rates with a soft credit check:
Yes
- Cosigner release:
After 12 on-time principal and interest payments
- Loan servicer:
Launch Servicing, LLC
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
3.99%+1
|
5.5%+
| $1,000 to $350,000 (depending on degree) | 5, 10, 15 |
- Fixed APR:
3.99%+1
- Variable APR:
5.5%+
- Min. credit score:
720
- Loan amount:
$1,000 to $350,000
- Loan terms (years):
5, 10, 15
- Loan types:
Any private or federal student loan
- Repayment options:
Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
- Fees:
Late fee
- Discounts:
Autopay, loyalty
- Eligibility:
Available in all 50 states (international students can apply with a creditworthy U.S. citizen or permanent resident cosigner)
- Customer service:
Email, phone, chat
- Soft credit check:
Yes
- Cosigner release:
After 36 months
- Loan servicer:
Firstmark Services
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
3.59%+2,3
|
5.34%+2,3
| $1,000 up to 100% of the school-certified cost of attendance | 5, 8, 10, 15, 20 |
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
4.24%+
|
4.97%+
| $1,000 to $99,999 annually
($180,000 aggregate limit) | 7, 10, 15 |
- Fixed APR:
4.24%+
11
- Variable APR:
4.97%+
11
- Loan amount:
$1,000 to $99,999 annually
($180,000 aggregate limit)11
- Loan terms (years):
7, 10, 1511
- Repayment options:
Full deferral, immediate repayment, interest-only repayment, flat/full repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
- Fees:
None
- Discounts:
Autopay11
- Eligibility:
Available to borrowers in all 50 states. Must be a U.S. citizen or permanent resident.
- Customer service:
Phone, email
- Prequalified rates with a soft credit check:
Yes
- Cosigner release:
After 36 months11
- Loan servicer:
American Education Services
- Min. income:
$1
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
4.8%+8
|
7.77%+8
| $1,001 up to 100% of school certified cost of attendance | 5, 10, 15 |
- Fixed APR:
4.8%+8
- Variable APR:
7.77%+8
- Min. credit score:
670
- Loan amount:
$1,001 up to cost of attendance
- Loan terms (years):
5, 10, 15
- Repayment options:
Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, forbearance
- Fees:
Late fee
- Discounts:
Autopay, reward for on-time graduation
- Eligibility:
Must be an Indiana resident or a U.S. citizen attending an eligible Indiana school
- Customer service:
Email, phone, chat
- Prequalified rates with a soft credit check:
Yes
- Cosigner release:
After 12 months
- Loan servicer:
American Education Services
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
5.75%+
| N/A | $1,500 up to school’s certified cost of attendance less aid | 10, 15 |
- Fixed APR:
5.75%+
- Variable APR:
N/A
- Min. credit score:
670
- Loan amount:
$1,500 up to cost of attendance less aid
- Loan terms (years):
10, 15
- Repayment options:
Full deferral, interest only, immediate repayment, academic deferral, forbearance
- Fees:
None
- Discounts:
None
- Eligibility:
Must be a U.S. citizen or permanent resident and be making satisfactory academic progress.
- Customer service:
Email, phone
- Prequalified rates with a soft credit check:
Yes
- Cosigner release:
After 48 months
- Loan servicer:
American Education Services (AES)
|
Credible Rating
Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.
|
3.490%9
-
15.49%9
|
5.04%9
-
15.210%9
| $1,000 up to 100% of school-certified cost of attendance | 10 to 20 |
- Fixed APR:
3.490%9
-
15.49%9
- Variable APR:
5.04%9
-
15.210%9
- Min. credit score:
Does not disclose
- Loan amount:
$1,000 up to 100% of school-certified cost of attendance
- Loan terms (years):
10 to 209
- Repayment options:
Full deferral, fixed/flat repayment, interest only, academic deferment, forbearance, loans discharged upon death or disability
- Fees:
Late fee, non-sufficient funds (NSF) fee
- Discounts:
Autopay
- Eligibility:
Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a qualifying cosigner.
- Customer service:
Phone, chat
- Prequalified rates with a soft credit check:
Yes
- Cosigner release:
Borrowers can apply after graduation, 12 consecutive on-time principal and interest payments, and meeting certain credit requirements.
- Loan servicer:
Sallie Mae
|
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|
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 5.20%-35.99% APR with terms from 12 to 144 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 12%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of October 9, 2023, none of the personal loan lenders on our platform require a down payment nor do they charge any prepayment penalties.
About the author
Credible Staff
The goal of the Credible editorial writers and staff is to help our readers get up to speed on issues surrounding student loans, mortgage, and personal finance, so you can make informed decisions. We’re here to help you stay on top of the latest news, trends, concepts, and changes in policy and regulations.
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