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How do I find a better loan?

QUESTION: I am a student at the Ohio Institute of Photography and Technology. I just got my financial aid package, which includes one loan for my parents and another unsubsidized loan. My mom found out that both don’t have great interest rates, start accruing interest now, have different payback times, and have hidden fees from the government.

My question is: Are there better loan alternatives, especially ones that don’t start accruing interest until after I graduate? My mom is concerned because I have a brother who will graduate in two years and she needs to save money for him, too. Signed, Loan Hunter

Dear Loan Hunter:
As you’ve discovered, the federal government has different types of loans based on students with different financial need. Your package consists of unsubsidized loans, which means that once the dollars are disbursed, interest starts accruing. Or, in simple terms, once you or your school get the money, the amount of interest you owe starts to add up. You did not have high enough financial need to receive a subsidized loan, one in which interest starts to accrue after you graduate or begin repayment.

Not satisfied with the package you’ve received? Here’s our advice:

1. Meet with a financial aid officer at your school. Explain your financial situation and ask if there is additional aid for which you may be eligible.

2. Investigate scholarship opportunities. There are scholarships available for every major, including photography-related majors. Purchase a scholarship directory or search a free one such as at our website, Also, check with organizations in your community, such as civic organizations and local businesses.

3. Research your alternatives. The federal government is the largest supplier of educational loans. Of the $97 billion in financial aid awarded last year, 40 percent was from federal loans according to the College Board. In general, federal loans are seen as the best option for students because of their competitive interest rates, lower credit requirements, and longer repayment periods. However, investigate your alternatives, which include private loans from colleges, banks, and private loan companies; loans from your parents’ retirement plans; or home equity loans. Understand that in most cases these loans have higher rates and fees.

4. Know what you are getting into. Whichever loan you decide upon, read the small print and understand what you are signing up for. Ask your college for a list of its preferred lenders, which tend to offer proven customer service and responsiveness. Ask questions about the paperwork you will need to complete and the repayment plan. The more you learn, the better.

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Gen & Kelly Tanabe

Gen and Kelly Tanabe are the founders of SuperCollege and the award-winning authors of 11 books on college admission, financial aid and scholarships. Together they were accepted to all of the Ivy League colleges and won more than $100,000 in merit-based scholarships to graduate from Harvard debt-free.