If your financial-aid package includes a loan from the school itself, you'll probably receive that money automatically -- or will simply see the amount of the loan deducted from your tuition bill. But for most other loans, you'll need to find a lender (except for certain federal loans where Uncle Sam is the lender), complete an application and wait for approval.
In most cases, choosing a loan is fairly cut-and-dried. You could choose to decline a federal loan offered in a financial-aid package in favor of, say, a private loan, but in most cases you wouldn't want to. Subsidized Stafford loans are a very good deal for students, since Uncle Sam pays the interest while your child is in school. And it's tough to do any better than a Perkins loan (a federally funded loan that's administered by schools and has a 5% interest rate). Even unsubsidized Stafford loans are a pretty good deal, given the flexible repayment terms and low rate. (The Stafford interest rate is variable and can change annually, but it is capped at 8.25%.)
For private loans, you'll want to select the lowest-cost alternative, based on the loan's interest rate, fees and repayment terms.
The following sections describe your options among federal and private loans.
IN THIS TUTORIAL
When You're Ready to Apply
