Top 5 Student Loans To Consider For Spring Bills

Hi everyone, welcome back to the channel on the College Process. Once again, I'm Ed from Principia Prep and today we're going to be going over the top five student loans to consider and student loan basics. But before we begin, if you are new to the channel and are looking for additional college content, please hit the subscribe button down below. It will notify you when new videos come out. As well as, if you have any questions on today's video or any video we have here on the channel, please leave your questions down below in the comments section. As many of you already know, every Friday I take all the questions you guys leave on any of these videos here, make a detailed answer video, put it back here on YouTube so that everyone has detailed answers to all the questions you guys have here on the channel. As well as, we are still running the James Whistler Memorial Scholarship. If you are interested in our organization's scholarship program, the James Whistler Memorial Scholarship, very simple, just down below in the description is the link for the James Whistler Memorial Scholarship. Just watch the video, I'll explain to you guys how we here at Principia give out scholarships to outgoing students every year going off to college. As well as, also in the description down below is also the organization's Venmo, as well as our buy us a coffee. If you want to help support the channel, allowing us to keep making these college videos for you guys out there. And let's jump right into today's video. The top five student loans to consider and the student loan basics. Now I put together the top five list here of all the student loans out there for you guys, specifically the best student loans out there, based on certain factors, mostly the interest rate available for you guys to get the lowest rates out there. When I put this list together, I put a bunch of different components in place. First off, I looked at who's got the best interest rates, because obviously as parents and students out there looking to borrow loans, we're looking at first who's got the lowest interest rates available. Then I looked at who's got the best terms and conditions. You know, who's giving us longer timeframes, who's giving us benefits if we pay directly every month, let's say from a direct deposit from a bank. Certain loans will actually give you benefits from that and take off a quarter point, in some cases even more. I also looked at additional terms and benefits, such as if we did use a parent as a co-signer to bridge the gap for the students that don't have credit out there to be able to get the private loans. Who allowed you to take the parent off the loan after a year or two, maybe even three years of payments on time. All these different factors basically put together the top five lists here I'm going to be talking about in a moment. Now, all the top five loans I'm going to talk about here, I want to make sure that you guys watch the entire video. I know sometimes parents or students who watch the video get the first top two loans and say, okay, we're just going to go forward and start shopping, but it's not really the way it works. In the world of student loans, you really want to shop around in a few different factors, because for some of you out there, the top one, two, or three loans might be the best loan. For other of you out there, the top fourth or fifth loan actually might be the best loan for you, believe it or not. So I hope you guys watch the entire video. So you see why each one of these loans are ranked where they are ranked. And now right off the bat, let's start off with the top three of the top five loans out there. We have Sally Mae, Ernest and college app. Now all these three here, as you'll see here, all three of them have exactly the same interest rate, by the way, at the 4.5%. Now this has gone up over the last few years, because obviously the Federal Reserve has raised rates because of inflation and everything else. So these are the best three loans out there as far as interest terms and credit requirements. I put Sally Mae at the top for a few reasons. Right off the bat, Sally Mae does help our organization, so it does help our scholarship program to give out more money for scholarships. So if you are considering Sally Mae as one of your top lenders to go out there and shop around, I would ask in the description down below, we do have a link that actually helps our organization, obviously helps our scholarship program and give back every year to students going off to college in the form of giving more scholarships. So if you are considering Sally Mae as one of your options, I do ask if you guys use our link down below, if you're applying for a Sally Mae loan, it does help our organization. But that's not the only reason, by the way, that Sally Mae is ranked number one, because you can see here, one, two, and three have the same exact interest rate. The main reason we have Sally Mae on there is because of the fact that Sally Mae is the only lender out there that let the parent be taken off the loan after 12 months of payments. What that basically means is, by the way, the world of college works like this. If you guys are going out there and getting a private loan or a state loan, either one of these two loans will require the student to have a cosigner. I know out in the world of YouTube, a lot of people talk about the student get their own loan. They don't need a parent cosigner. This does not exist. I'm not sure where this is coming from. And I've been doing this 25 years. I have never seen a student be able to take out a loan by themselves leaving high school. It does not exist. So pretty much all the time, if you're looking at either the top three lenders or the next loan I'm going to talk about is the fourth ranked loan. Now, the way it works for after you've made 12 payments on time, or if you make 12 payments all at once, you can take the parent off as a cosigner. That way, the loan doesn't show up on both your credit scores. It only shows up on the student side, not the student and the parent side, which is actually a big deal nowadays, believe it or not. Because if you're looking to do anything financial, if you're looking to go buy a car, if you're looking to buy a house, if you're looking to sell your house and then move in somewhere else kind of thing and start renting, all those things, as far as the debt on your credit report, do affect your availability to get a rental property, to get a second home, to buy another primary property, to buy a car. All these things are intertwined basically. So if we can take ourselves off loan after 12 months, this is something that's very beneficial, which the other lenders don't provide anywhere near this type of assistance, the way Sally Mae does. So since all three of these guys have the same interest rate, I would shop around. Let's say you do use our link for Sally Mae and then you go and find out that College Ave has a better rate for you guys. Then go with College Ave. I'm not telling you to go to Sally Mae because they're helping us here. I'm telling you go with the one that has the best terms and interest rates for you guys out there. Now, a little bit more insight. For the top three loans, you are going to need at least a 640 credit score. The other two loans I'll be talking about, ranked fourth and fifth, won't need that high of a credit score. Also, another benefit of the top three loans is they don't have origination fees or any fees whatsoever attached to the loans, which some other loans do have. Now, since we have those three out there now, now that we've talked about the top three here, these are the best three out there that are available based on credit requirement, based on terms, based on interest rates, and a bunch of other factors. Let's talk about rankings four and five here. Now, for rankings four and five here, we have the NJ Class Loan and we have the Parent PLUS Loan. Now, the reason we have NJ Class here and Parent PLUS Loan at these rankings is a few reasons. Number one, obviously their interest rates are higher than the 4.5% available from the top three lenders we just talked about. Now, what I did here is I figured I'd just jump on the NJ Class website, which is on tisa.org, because this website here kind of gives a lot more insight on both the fourth and fifth rank loan, the NJ Class Loan, which is right here, and the Federal PLUS Loan information, which is right here. Both the private lenders, the ones we just talked about, the top three, as well as NJ Class Loan does provide three options for borrowing. These guys will let you borrow 10 years standard repayment, NJ Class, as well as the private lenders I just showed you, which you basically pay a monthly basis over 10 years. That's what will give you typically the lowest rate for the NJ Class Loan, as well as the private lenders. As well, if you do a 15-year repayment, which the private lenders also do have, which basically allows you to pay just the interest while you're students in school, and then six months after they graduate, that's when the principal gets tacked on top. As you can see here, the third option, which is also provided by the private lenders, as well as NJ Class, allows you to not pay anything at all, so no payments at all while the student's in school. Then six months after the student graduates, for both the private lenders and the NJ Class Loan here, that's when the repayment starts, principal and interest. What I typically suggest, whether you're going private lenders or whether you're going NJ Class Loan or Parent PLUS Loan, which I'll talk about in a moment, I always suggest at least going for the interest-only payment if the principal and interest payments are too big for you guys at this point in time. You always want to try to mitigate the interest, that way it doesn't grow on itself and make the loans more of a burdensome than they already are to begin with. Now, that being said, between these two guys ranked fourth and fifth, what really kind of separates the fourth-ranking NJ Class Loan from the Parent PLUS Loan is there's an origination fee. Now, as I mentioned before, the private lenders do not have origination fees anymore. NJ Class used to have an origination fee, but they got rid of it, so it's no longer available, which is a big benefit for us. Obviously, we're looking to borrow using NJ Class Loans. Now, the Parent PLUS Loan here has an origination fee here, as you can see, of 4.23%. That's why I have the range of the loan interest rate going from 9% up to over 10%. Because once you factor in that, let's call it the kickback, the fee for you guys taking out the loan, and just give me an idea of how it works, for every 10,000 you guys take out to the Parent PLUS Loan ranked fifth, you guys are essentially paying the US Department of Education $423 for every 10,000 you're borrowing to borrow at a rate of 9%. So obviously, usually, if you guys are getting a high rate on the private side, I typically just looking at the NJ Class Loan, especially now since there's no origination fee. But once again, the reason they're ranked fourth is because their starting rate is 5.99, let's call it 6%, versus the private lender starting at 4.5%. Obviously, credit score is consideration. So the higher credit score, the more likely the private lenders are the better route to go with. Now that being said, in addition to those aspects, another difference between the NJ Class and the Parent PLUS Loan, another reason I put the video in this format here, especially since NJ Class shows a great breakdown of these two loans, is the fact that these two guys require additional documentation the private loans don't require. And for the additional stuff the NJ Class Loan and Parent PLUS need that the private loans don't want, I'm going to show you guys this PDF here from NJ Class which breaks it down very well. If we go to the bottom here of the PDF, you're going to notice right at the back, the NJ Class Loan and the Parent PLUS Loan both require the FAFSA form to be completed. So if you haven't done the FAFSA form, you cannot utilize the NJ Class Loan, nor can you utilize the Parent PLUS Loan. That's a requirement right at the back, that the private lenders don't require. In addition to that, another requirement the private lenders do not require that the Parent PLUS Loan and the NJ Class both require, is you guys must borrow the federal loans they offer you. So as a freshman student going in, your student will be offered $5,500 in federal direct loans. As a sophomore, they'll be offered $6,500. And as a junior or senior, they'll be offered $7,500 in federal direct loans. They must take these loans before NJ Class or Parent PLUS Loans will be taken in. Just another thing to kind of consider as you're going through this whole process. And then one last thing that makes these guys ranked fourth and fifth, which is actually kind of in a weird way of benefit, the credit scores required by these guys are typically between 600 to 640 and above. So if you fall below that 640 credit score we talked about before, the private lenders typically want, I'd probably look at these guys as better options to consider borrowing from. Because once you're in that 620, 630, 640 range, the private lenders' interest rates are probably going to be higher, because of the fact that credit score is a major requirement. Where for NJ Class Loans and Parent PLUS Loans, as long as you're accepted, these are the rates you're going to get. So if I get accepted based on a 630 credit score, I can tell NJ Class Loan, give me the interest-only payment while in school, and I'm locking in at 6.99. Or if my rate's too high or NJ Class denies me, but Parent PLUS Loan accepts me, then I know I'm in the nine range, which is really the fifth-ranked loan here, because the Parent PLUS Loan is kind of a backup, backup for you guys, if the other loans don't work out. Now, of course, if Ernest or College Amp or Sally May comes back with, let's say, a nine or 10% rate, then yes, I would go with the NJ Class Loan, because of the fact that that lower rate, even with the origination fee, is actually lower than the starting rate for the private lenders, as far as for you specifically. On the screen is my contact information. I do help out families one-on-one through Zoom meetings. If you do need help, please just text me. That's my cell phone number. Text message is the fastest way to get a hold of me, or you can email me. That's the second fastest way to get a hold of me, and I'll be able to set up a Zoom meeting so we can go over your situation, whether it's financial or admissions-based. Other than that, thank you for watching today's video. Once again, my name is Ed from Principia Prep.