Dear Parent,

If you're feeling a little overwhelmed by the idea of borrowing for college, you’re definitely not alone. I get asked all the time: Where can I get the best student loan?

The truth is, finding the best rate and terms isn’t always straightforward. It really comes down to how lenders see your financial profile – your credit score, income, and other factors all play a role.

Before we dive into the tips, it’s important to know that federal student loan rates were just released today:

• Federal Student Loan Rate: 6.39% + 1.06% origination fee

• Parent PLUS Loan Rate: 8.94% + 4.23% origination fee

These rates are 0.1% lower than last year but still among the highest federal rates in the last decade. That’s why it’s more important than ever to understand your options.

Here are my best tips for getting the best rates and terms on student loans:

1. Understand What You See Isn’t Always What You Get:
   Lenders advertise a range of interest rates, but the rate you’re offered is only determined after you apply. To truly compare, you have to see what each lender is willing to give you.
   
   

2. Know How Loan Options Affect Your Rate:
   The loan term (how long you take to pay it back) and the repayment option you choose (like paying interest while in school or deferring payments) can change the interest rate a lender offers you.
   
   

3. Apply to Multiple Lenders Within a 30-Day Window:
   Here’s the good news: credit bureaus allow a 30-day window for loan shopping. This means you can apply to several lenders without it negatively impacting your credit—those multiple credit checks are grouped into one inquiry.
   
   

4. You Can Change Your Mind If Rates Drop:
   If you find a great rate and accept a loan, you can still cancel if rates go down before the money is disbursed. You’re not locked in, so keep an eye on rates and be ready to adjust.
   
   

5. Compare Rates and Terms:
   This is why I always encourage families to shop around. Your best loan option will come from comparing rates and terms from at least three lenders.
   
   

6. Max Out Federal Student Loans Before Looking at Parent PLUS or Private Loans:

   Federal student loans typically have lower interest rates and more flexible repayment options than Parent PLUS or private loans. At 6.39% with a 1.06% origination fee, it’s smart to use federal loans before moving on to higher-cost options.

Below, I’ve listed some of the top lenders we recommend. Take a few minutes to check rates with at least three of them—it’s the smart way to make sure you’re getting the best deal possible.

If you want a bit more guidance, reply to this email—I’m happy to help you understand your options and answer any questions.