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

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. 

Announcing our new low rates for 2020–2021: VSAC student and parent loans for the upcoming academic year offer competitive fixed interest rates as low as 3.99% APRour lowest fixed rate ever! 

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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.

 

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.

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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

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.

Consider repayment options

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.

 

 

credit score

Minimize Debt Before Borrowing

Follow these tips to keep your education debt as low as possible:

  1. Take advantage of free aid first. Apply for all available grants and scholarships. This “gift aid” doesn’t have to be paid back.
  2. Use savings and current income. Explore tuition payment plans, which spread payments out over the academic year.
  3. Cut expenses. How much can you economize while in school? 
  4. 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.

minimizing debt