College is increasingly expensive, and borrowing wisely is one of the most important financial decisions a student and their family can make. But most people still choose loans based only on a few criteria:

• They accept the first offer they see.
• They shop only on interest rate.
• They don’t consider how much flexibility (or the lack of it) will matter later.

The result? Many borrowers end up locked into inflexible, high-cost loans that increase financial pressure both during and after college. That’s what this guide is here to help you avoid.

What should you look for in a student loan offer?

1. Total Cost of the Loan — Not Just the Interest Rate

Don’t make a decision based on low APRs alone. Look at the full repayment picture:

• APR: Reflects both interest and any upfront fees.
• Repayment Term: A longer loan term may lower monthly payments but increase total cost due to interest you’ll pay over time.
• Capitalization: Unpaid interest added to the loan principal during deferment.

2. Loan Structure: Lump Sum vs. Line of Credit

There are two main types of private student loans:

Loan Type	How It Works	Pros	Cons
Traditional Lump-Sum Loan	Borrow the full amount at once	Simple; funds are available upfront	Overborrowing risk; interest accrues on entire balance
Education Line of Credit (LOC)	Apply once, borrow as needed each semester	Flexible; borrow only what you need, if/when you need it	Harder to find, may need to become a member of a credit union

Why it matters: Most traditional loans make you commit to borrow a year’s worth of expenses all at once, which often leads to overborrowing. With a multi-year education line of credit, you apply once and tap into the funds only as needed – which means lower balances, less interest, and more control.

 3. Repayment Flexibility & Protection Options

Ask these critical questions:

• Can I defer payments or make interest-only payments while in school?
• Are there hardship forbearance or income-based repayment options?
• Is a co-signer release available after on-time payments?

Many credit union lenders offer deferment, forbearance, and co-signer release options. (Offerings vary by credit union.)

4. Fees, Penalties, and Fine Print

Always check for:

• Origination fees (Note: these are typically added to federal student loans)
• Late payment fees/penalties or NSF charges

5. Lender Type & Support Experience

There are countless options available for private student loans. Borrowing from a credit union isn’t just about the loan, it’s about values.

• Credit unions are member-owned and not-for-profit.
• They often offer more personalized service and educational resources to help you make wise financial decisions.
• You’re not just an account number – you’re a member.

This human-centered approach means better support and fewer headaches.

Common Mistakes to Avoid When Comparing Student Loans

• Only shopping by interest rate
• Ignoring repayment options
• Borrowing the full amount upfront “just in case”
• Not reading the fine print
• Skipping comparisons

When Should You Start Comparing Student Loan Offers?

Right now. Even if you haven’t received your full tuition bill yet, early comparison gives you time to:

• Avoid high-pressure deadlines
• Understand all your options
• Choose a loan that fits your actual budget and college plans