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Back in the 1960s, the singing group The Miracles had a song titled Shop Around. Included in its lyrics were, " My mama told me/'you better shop around”. This is definitely the case when it comes to private student loans. In the case of a federal student loan, the government basically tells you how much you can borrow, sets the terms for the different types of loans and basically says take it or leave it. This is not the case with private lenders. You should shop as many different lenders as you like but at least a few. That way, you should be able to get the best terms and rates given your particular needs.
When you're shopping around, don't choose a loan just on its rate though this is important. Be sure to check out the other terms that could be helpful now or in the future. For instance, if you choose a loan with the repayment option of making interest only payments while you're in school, you won't have to worry about taking on those bigger student loan payments right away. You should also check to see if the loan offers flexible payment options after college some, such as Sallie Mae does.
Understand your payments
If you take out a federal student loan it's important that you know what you'll eventually be paying on it. But this can be even more important if you choose a private student loan. The reason for this is that with a federal loan with 10-Year Standard Repayment you could plan on paying, say, $150 a month once you graduated. If you then can't find a job or end up with a lower paying job, you could switch to an income-based repayment plan or an extended plan with lower payments. On the other hand, if you end up in the same place with a private loan, you would still be on the hook for that $150 a month – even if you don't have a job. You should be doubly sure that you would be in a position to make the minimum payments on your private student loan, even if your life doesn't go as you had planned.
More shopping around
If you’re are thinking about taking out a private loan to cover, say, a $10,000 gap in funding from the school you’ve chosen, you might be better off shopping around for a more affordable college. Many students now choose to go to a two-year or community college for their first couple of years and then transfer to a more prestigious school. That way they sort of get the best of both possible worlds. They save a lot of money on tuition, which reduces their student loan debt substantially, yet they still graduate with a "prestigious" degree.