What the Big Banks Don't Want You to Know

The short answer is "A Lot." For starters:

That you do have a choice – Many students and parents will simply apply with a lender listed in the school’s financial aid office "preferred lender" or "alternative lender" list. You do not have to use those lenders, and could often do much better by spending just a little time doing your own research.

That the low rate advertised is most likely not the rate you will actually get. Don’t be fooled by “come-on rates” based on perfect credit histories. Even if you have great credit, you may not qualify for that “too good to be true” offer.  Click here to see our current private student loan rates.

That you should always, always max out less expensive federal aid/loans first – this includes the Stafford Loans for students. The Free Application for Federal Student Aid (FAFSA) should always be your first step when financing a college education. Even if you don’t think you will qualify for aid, nearly everyone can qualify for at least some type of federal student loan. 

PLUS loans for parents may occasionally be worth considering for financing undergraduate education in some circumstances.  These are fixed rate loans where the parent is fully responsible for repayment.  While the rate is fixed, it is at a higher rate than the Stafford loans and contains fees.  Repayment typically begins within a few days after the money is disbursed to the school and payed back to the lender within ten years.  Learn more about PLUS loans here.

That credit scores are very important – using a co-borrower with good credit history could significantly lower your rate. Learn more about how credit scores are determined here.

That the school you attend could affect your loan rate – Some lenders consider default rates at the school or even type of school you attend and take that into account when setting your rate. This could significantly impact your rate even though it does not directly have anything to do with your credit or ability to repay the loan. Find out more about how rates are set.

That rate and monthly payment aren't everything – Determining the total cost of your loan means looking at more than just rate or monthly payment. Be sure you consider:

Fees – Up-front and hidden fees. These fees are often referred to as "origination fees" but also may include prepayment and other hidden fees.

Term – The number of years you have the loan will affect how much you pay in interest overall. Longer terms will result in lower monthly loan payments, but typically mean you will pay more in total interest payments while carrying the loan debt for more of your life.

Repayment Terms – Are there flexible options to make repayment easy for you? What about release terms for your co-signer?

These are all important aspects to consider when shopping for your student loan. And you can find the answers easily by reading the Truth in Lending disclosure that lenders are required to give you before you sign any final loan documents. If the Truth in Lending statement does not match what you expect, it is definitely time to ask some questions and may be time to find a new lender. Luckily, with your credit union, you have more choices today than ever before.

Try our total cost calculator to find your real loan cost. Learn more about Credit Union Student Choice Loans.