If you're considering student loans to help you pay for school, you're not alone - many students need loans to cover their full cost of attendance. In 2010, 67% of bachelor's degree recipients used loans to pay for their education. But the more money you borrow now, the higher your monthly loan payments will be after you graduate.

If you have to take out student loans, comparing your options can help you find the student loan best suited for your needs.





Key Questions

I have to borrow money for school. What are my options? What if my grants and federal loans don't cover the cost of attendance? What should I consider when shopping for a private loan? If you have to take out student loans, you essentially have two choices: federal student loans and private loans. For most borrowers, federal student loans are the best option. When you start to pay back your federal loans, the interest rate will be fixed, which will help you predict your payments after graduation. And in some cases, the federal government will pay the interest on your loans while you are in school - these loans are called subsidized loans. Other student loans are generally private student loans. The most common private student loans are offered by banks. Their interest rates are often variable, which means your interest rates and payments could go up over time. Private loans can also be more expensive - rates have been as high as 16% over the past couple of years. And when it is time to repay, private loans don't offer as many options to reduce or postpone payments. For most people, federal student loans are a better deal than private student loans, so you'll want to take advantage of federal options first. If your grants and federal loans are not enough to cover the cost of your education, you should consider the following options: Search for scholarships. Look for state and local grants and scholarships using one of the many free scholarship search options available. Servicemembers, veterans, and their families may be eligible for GI Bill benefits and/or military tuition assistance.

and using one of the many free scholarship search options available. Servicemembers, veterans, and their families may be eligible for and/or military tuition assistance. Cut costs. Consider getting one or more roommates or a part-time job, possibly through Federal Work-Study.

See what your family can contribute. Your parents may be able to get tax credits for their contributions. Parents can also explore the federal Direct PLUS Loan program.

Shop around for a private loan. Remember that these loans generally have higher interest rates and less repayment flexibility compared to federal student loans. You generally should turn to private loans only after you have explored all other grant, scholarship, and federal loan options. If you can show you have a very high credit rating, you may find an affordable private student loan, though you will likely need a co-signer, who will be legally obligated to repay the loan if you can't or don't. Look for the one with the lowest interest rate and flexible repayment options. First, make sure you need a private student loan. These loans generally are not as affordable as federal student loans and offer little repayment flexibility. Here are some factors to consider: Talk to your school's financial aid office to get a form certifying that you need additional aid to cover the cost of attendance - most lenders require it.

Shop for lower interest rates and loans that offer flexibility if you have trouble making payments.

Some private lenders may advertise very low interest rates - remember that only borrowers with the best credit will qualify for these rates. Your rate could be much higher.

In 2011, over 90% of private student loans required a co-signer, so make sure you have someone like a parent or another relative lined up. Your co-signer will be legally obligated to repay the loan if you can't or don't. You may want to consider loans that offer "co-signer release" after a number of on-time payments.