Serving our community is at the heart of all we do. During these challenging times, we remain steadfast in our commitment to supporting Vermont students and their families. Click here for VSAC program updates in response to COVID-19.
Student loans: How to compare
Student loans are NOT created equal. Here's what to know before you borrow.
There are so many student loan options available, with each lender shouting out rates and benefits. But what does it all mean, and how do you really know which loan is better than the next?
We want to help you sharpen your skills to become a more confident borrower. We’ll show you what to look for and how your choices can help reduce the amount you’ll ultimately have to repay.
It’s worth putting in the time now to make a good choice about a loan that may be with you for 10 or 15 years. Class is in session; let’s get started.
VSAC’s student and parent loan rates
VSAC is pleased to offer fixed interest rates for 2019–2020 as low as 4.79% APR—lower than federal PLUS and our lowest fixed rate ever.
Your interest rate is based on the repayment plan you choose; the origination fee is based on your credit rating; and your final APR is based on both your credit and the repayment option you choose.
APPLY NOW THROUGH SECURE MYVSAC
| VSAC Student Loans | ||
|---|---|---|
|
4.79% |
5.89% |
6.90% |
|
APR 4.79%–5.51% |
APR 5.89%–6.47% |
APR 6.65%–7.15% |
| Compare Details | ||
| VSAC Student Loans for Parents | |
|---|---|
|
4.79% APR 4.79%–5.51% |
6.70% APR 6.66%–7.33% |
| Compare Details | |
VSAC vs. PLUS
VSAC vs. PLUS
Don't "Check the box" to accept federal PLUS on your financial aid offer until you check out this comparison to VSAC's loan
VSAC promotes the use of grants, scholarships, savings, and current income to help cover the cost of college. However, many families will need the help of a loan to help cover remaining costs. VSAC is committed to helping individuals understand their options so that they can borrow only what they need and minimize costs.
VSAC’s loans for undergraduate, graduate/professional, and parents have interest rates lower than the federal PLUS:
4.79% APR
4.79% APR
VSAC Parent Loan
Federal PLUS Loan
VSAC challenges YOU to push pause on PLUS loans. Even if you’ve already started the process, take a moment to shop around and compare the details.
Let's Compare
Let’s say you need a $9,000 loan with a 10-year repayment. The total amount paid will vary, depending upon when repayment starts. This example compares federal PLUS (including its standard fee of 4.236%) to the VSAC Immediate Repayment loan (which in this example includes a 3% fee—a common scenario). Fees for VSAC loans are determined by your credit rating, so your loan with VSAC may have no fee, a 3% fee, or a 5% fee.
for
1
VSAC Immediate Repay
Interest Rate:
4.79% APR
Fees:
3%
2
Federal PLUS
Interest Rate:
7.08%
Fees:
4.236%
Conclusion
In this example, the monthly payment is $13/month lower with VSAC’s Immediate Repay, and total paid with interest over 10 years is $1507 lower with VSAC’s Immediate Repay. Many parents borrow for multiple years -- multiply these differences by four years and the money really adds up!
COMPARE DETAILS HERE
LOAN QUESTIONS?
Give us a call to speak with one of our counselors.
Monday–Friday, 8:00 am–4:30 pm, 800-226-1029
Yes, Interest rates matter. Here's why.
A lower fixed interest rate is a good thing, but how much does a difference in rate matter in real dollars—both the amount you’ll pay per month and the total over the entire term of your loan?
Think a few percentage points don't matter? Think again. Here’s an example that shows the different amounts you could expect to pay monthly and in total, based on 3 possible hypothetical rates.
VARIABLE VS. FIXED
Fixed interest rates stay the same over the life of the loan. Variable interest rates change with the financial markets (which means they can go up!). Variable rates can start low, then rise and end up costing a lot more over the life of the loan. That's why VSAC offers only fixed-rate loans. We believe they are the safest option for borrowers.
BEWARE OF TEASER RATES
“Teaser rates” are the low advertised rates that few borrowers actually qualify for, and may include shorter repayment terms of 5 years. If you get an interest rate higher than you expected, stop (or pause) the application process and compare your other loan options.
Explanation: This comparison example is based on a loan amount of $15,000, with no fees, paid over 15 years. The rates featured are three possible fixed interest rates you may find in the college loan marketplace today. These rates do not reflect the offerings of a particular lender.
Interest rates matter! Based on these three scenarios, total loan costs differ from $3,031–$6,135.
Monthly payments differ from $17–$36 per month. Even $17/month can add up to more than $200/year.
Consider Repayment Options
- What are the repayment options for the loan? When will you have to start repaying the loan? How many years will it take to pay off the loan? The repayment length, or term of the loan can be 10 years, 15 years, or even less. Compare how the repayment length affects the total cost.
- What are the repayment benefits? Are there options for reduced payment or suspended payment if you experience economic hardship? Ask also about income-based repayment and loan consolidation or forgiveness.
WANT TO SAVE MONEY IN REPAYMENT?
Can you pay more than the amount due? Adding a little extra to each on-time monthly payment can reduce the total amount you'll pay over the life of the loan.
How do credit inquiries affect your credit score?
Many folks believe that if they shop around for loans, every inquiry into their credit will have a negative impact on their credit score. Not so.
In general, the credit bureaus expect borrowers to “rate shop,” so if credit bureaus see multiple inquiries for a similar loan type within a certain timeframe (30 days is a good rule of thumb, though this can vary), they consider the activity to be a single inquiry against your credit score.
So, if you’re not offered loan terms (rates & fees, for example) that you expected when you applied for a particular loan, stop your application and shop around.
Minimize Debt Before Borrowing
Follow these tips to keep your education debt as low as possible:
- Take advantage of free aid first. Apply for all available grants and scholarships. This “gift aid” doesn’t have to be paid back.
- Use savings and current income. Explore tuition payment plans, which spread payments out over the academic year.
- Cut expenses. How much can you economize while in school?
- Estimate your future monthly payments with the College Board’s loan payment calculator. Ideally, student loan payments should consume no more than 15% of your income after college graduation. The interest rate and the repayment plan you choose will impact your total cost of borrowing. And remember, you may need to borrow for 4 years of school. Consider the entire amount you'll be responsible for when you finish your education.
BORROW ONLY WHAT YOU NEED
Your goal should be to minimize loans as much as possible. You can choose to decline a loan or borrow less than the offer, reducing what you’ll need to pay back.
