1. Interest rate. The lower the better, but also consider whether the rate is fixed or variable. Today, federal loan interest rates are fixed but many private loans have variable interest rates that can increase at a later date.
2. Subsidization. Subsidized loans don’t accrue interest until graduation, which saves a lot of money. Students have to qualify for subsidized loans based on need, however.
3. Fees. Some lenders charge processing fees that you either pay up front or that are taken out of the amount that you’ve borrowed. So make sure you know how much fees would cost you and how much you’ll actually receive from the loan.
4. Repayment Options. For some loans, repayment starts 60 days after the first loan check is sent, but others can be delayed until months after graduation or longer if the borrower encounters an economic hardship. Flexibility is good, but find out how much it adds to the loan amount before you use it. Also ask: “How long will I have to pay off the loan? Are there any penalties for paying off the loan early? And are there any incentives for on-time payment?"
Christine MacDonald is an education reporter. She recently paid off her student loans, nearly ten years after graduation.