4 Steps To Choosing The Right Student Loan In 2024

At College Aid Pro (CAP), our mission is to end the student debt crisis by providing families with the necessary tools and knowledge to make informed decisions about paying for college. We aim for a future where no loans are necessary, but we understand that this is not always feasible. This guide will walk you through everything you need to know about paying the bill and borrowing for college, ensuring you are well-informed about the rates, rules, fees, and repayment plans associated with student loans.

Understanding Student Loans

The Rising Cost of College

College tuition has been steadily increasing, making it essential for families to explore various financing options. While scholarships and grants are ideal, they often do not cover the full cost of attendance, leading many to consider student loans.

Types of Student Loans

There are several types of student loans available, each with its own set of terms and conditions. The primary options include federal loans, such as the Parent PLUS loan, and private loans from various lenders.

CAP’s firm recommendation is to begin any borrowing with the student maximizing the Federal Direct Student Loan. This is the only loan that does not require a parental co-signer and therefore the only student loan that is solely in the student’s name. One of the drawback to the FDSL is that the amount a student borrow is capped at $27,000 total ($5,500 Freshman year, $6,500 Sophomore Year, $7,500 Junior year, $7,500 Senior Year). With this limitation, some families are forced to look at student loan options beyond the FDSL. 

At CAP, we DO NOT sell loans or try to sway families in a particular direction as far as lenders. Part of our mission at College Aid Pro is to end the student debt crisis so our goal is NO loans, but we know that’s not always possible or realistic.

If loans are required we want you to be educated and understand ALL the rates, rules, fees, and payback plans. Do your homework!!

Federal PLUS Loans

Overview of Parent PLUS Loans

Parent PLUS Loans are federal loans available to parents of dependent undergraduate students. These loans have fixed interest rates and origination fees.

Current Rates and Fees

For the current season, Parent PLUS Loan rates have increased to 9.08% for all borrowers, with an additional 4% origination fee. These loans do offer forgiveness programs for civil service employees and flexible repayment terms, but they come at a higher cost compared to some private loan options.

Private Loans as an Alternative

Benefits of Private Loans

Private loans can be a viable alternative to federal loans, especially for borrowers with good credit. Private lenders often offer lower interest rates and no origination fees.

Comparing Rates and Terms

Private loan rates can start just under 5%, significantly lower than federal PLUS loans. To ensure you get the best deal, it’s crucial to compare rates from multiple lenders.

4 Steps to Choosing the Right Student Loan

Selecting the right loan requires careful consideration and comparison. Here are four steps to help you make an informed decision:

Step 1: Apply Through College Ave

Start by applying through College Ave to get your rate. This will give you a baseline to compare other loan offers. Click Here

Step 2: Apply Through Sallie Mae

Start by applying through Sallie Mae to get your rate. This will give you a baseline to compare other loan offers. Click Here

Step 3: Apply Through Earnest

Next, apply through Earnest, which offers a Rate Match Guarantee to any competitor. This means Earnest will match any lower rate you find from another lender. Click Here

Step 4: Compare to Federal PLUS & State Loans

Finally, compare your private to the Federal PLUS loan and state loan rates. While the PLUS loan has the highest origination fee (4%) and likely the highest rate (~9.08%), it offers forgiveness programs and more flexible repayment terms than private or state loans. Review the loan options provided by your state. For instance, Massachusetts, Rhode Island, and Iowa offer competitive rates and terms for student loans.

The Importance of Being Educated

Do Your Homework

It’s crucial to understand all aspects of the loans you’re considering. This includes interest rates, fees, repayment plans, and any potential forgiveness programs. Being educated about your options will help you avoid excessive debt and manage your finances effectively.

Resources and Tools

Utilize resources like CAP’s student loan marketplace to compare rates and get pre-approved for the best loan options. These tools are designed to help you make an informed decision without being swayed by biased recommendations.


Paying for college is a significant financial commitment, but with the right information and tools, you can make smart borrowing decisions. At CAP, we strive to empower families with the knowledge they need to navigate the complexities of student loans and minimize debt. Remember, doing your homework and comparing all available options is key to finding the best loan for your situation.


How can I avoid taking out student loans?

  • Consider applying for scholarships, grants, and work-study programs to reduce the need for loans.

What are the benefits of federal loans over private loans?

  • Federal loans offer forgiveness programs, more flexible repayment terms, and fixed interest rates.

What should I consider when comparing loan options?

  • Look at interest rates, origination fees, repayment terms, and any available forgiveness programs.

How do private loan interest rates compare to federal loans?

  • Private loan rates can be lower than federal loans, especially for borrowers with good credit, and they often have no origination fees.

Can I apply for both federal and private loans?

  • Yes, you can apply for both. Compare the terms of each to determine which is most beneficial for you.

What is a Rate Match Guarantee?

  • A Rate Match Guarantee means that a lender, such as Earnest, will match any lower rate you find from another lender, ensuring you get the best possible rate.