When researching college loans, you may come across loan comparison sites such as Credible, ELM Select, or FastChoice. You may have discovered these sites either through links from a school’s website or a web search. These websites are tools that can be very helpful by displaying several loan options, but they can also be a bit overwhelming, or even misleading. Here are a few things to keep in mind as you use them in your college loan research.

1. Interest Rate Range: Pay attention to the entire range of interest rates offered by each lender, not just the lowest rate displayed. For most lenders, the interest rate is determined by a combination of the borrower’s credit score and the length of the repayment term. Some lenders will offer multiple repayment terms ranging from 5 to 20 years. The lowest interest rate will only be available to borrowers with an exceptional credit score who also choose the shortest repayment term.
2. Loan Details: Take the time to navigate over to each lender’s website to research the exact terms of their loans. Each lender is required to have a disclosure statement on their site with all of their loan terms. You should review those terms to see if there are any fees associated with the loan above the interest rate. Also, see what the repayment options are and what would work best for your family. There may be options for immediate repayment, delaying repayment while the student is in school (often called deferred repayment), or paying only the amount of accrued interest while the student is in school.
3. Calculators: While reviewing the lender’s website, see if the lender has a loan calculator to help you determine your estimated monthly payments. The best calculators will show the payment amounts for when the student is in school and after they graduate. Calculators should also show you the estimated total cost of the loan, which takes into account the amount you borrowed, and all interest accrued.
4. Borrowers: For each loan on a comparison site, determine all borrowers on the loan. Is the parent the only borrower? Is it a co-borrowed loan with the student and another credit-worthy co-borrower like the parent? Or is the student the only borrower? Student-only loans often have the highest interest rates because most students don’t have a lot of established credit before they begin college. Co-borrowed loans mean responsibility for repayment is shared equally by the student and the co-borrower. On a co-borrowed loan, find out if the lender is basing the interest rate on the borrower with the highest credit score or a combination of the borrowers.
5. Find Out Your Interest Rates: Some loan comparison sites allow you to find out your interest rate without affecting your credit score by using a soft pull of your credit. Not every comparison site offers this feature. But you can still compare the interest rates on several loans by applying to all lenders you are interested in within a two-week period. Doing so will only count as one hard pull on your credit. Then you can select your best option. Remember, the lowest rate you qualify for may not always be from the lender with the lowest advertised rate.

Using loan comparison sites to research student loans can be helpful, but just remember that when you compare loan options, it can be hard to compare “apples to apples.” Also, be aware that lenders can pay for advertising on various loan comparison sites, so you may only be seeing a list of lenders willing to pay for the spotlight. It’s always best to go to the lender’s website directly.

It may feel like a lot of work to research several lenders to decide which college loan is best, but spending a little bit of extra time could potentially save you thousands of dollars of interest over the life of the loan. With years of experience supporting families, MEFA is ready to help you make informed decisions about college financing.