Finding Deals on Student Loans

The economy is sputtering, but the student loan business is still strong. If you have college studies in your future, you still have a reasonable chance to find some financing to help you cover the cost.

It's often said that experience is the best teacher, even though tuition can be costly. The alternative to experience is an institutional education-and unfortunately, that's not exactly cheap either.

Every year, thousands of college students depend on the continued availability of financial aid. With the current state of the economy, some are wondering just how long that aid will keep coming through. FinAid.com states that today's credit crisis may impact student loans in two ways: lower discounts on federal loans, and higher eligibility requirements on their private counterparts. Thankfully, universities aren't seeing a slowdown in the level of aid provided to their students just yet. Apparently, most lenders view the student loan as a relatively low-risk proposition. After all, many undergraduates will be making big bucks in just a few years, and history says that they're pretty likely to repay the debt.

Steps to finding the best student loan deals

How should you set out to find good deals on student loans? The least expensive student loans are those available through federal programs, such as the Stafford loan. For this reason, it's best to start your student loan search through official channels, even if you don't think you'll qualify. Here's an overview of how to proceed:

• Fill out the FASFA. The first step is to fill out the Free Application for Federal Student Aid (FASFA). Do this whether or not you think you'll qualify for federal aid, because you can't even get a Stafford loan if you don't submit it. You can turn in the application as early as January 1 of the year you plan to attend college. Prepare to list your prospective college choices on the FASFA form.
• Check with the financial aid office. About four weeks after submitting your FASFA, you and your prospective colleges will receive your Student Aid Report (SAR). Once you receive it, check in the financial aid office to ensure that your information has been received. Financial aid administrators use the SAR to create a financial aid package tailored for your needs, which includes the amount you can borrow under federal student loan programs.
• Ask for referrals and shop around. If federal loans don't cover the amounts you need to borrow, ask your school for a list of student lenders. You can also check with Sallie Mae, FinAid at www.finaid.org, and the Education Finance Council at www.efc.org. Although student loans are regulated, there may be variations in terms among lenders, so spend the time to shop around.

Navigating through the student loan process is one of those lessons of experience. It may be tedious work to find the right student financing, but the rewards will last you a lifetime.