Before you take Loans | George Fox University

We understand that the idea of taking out loans to help pay for school can be intimidating, but if you’re considering loans, there are ways to borrow responsibly!

Here are five tips to think about before taking a loan.

Tip One - Opt for the Federal Stafford Loans

Federal Stafford loans usually have the lowest fixed-interest rate out of all student loans and will have better repayment options down the road.

For more information and details on Stafford Loans please visit:

Subsidized Stafford Loans: These loans do not accrue interest while you are in school.

UnSubsubsidized Stafford Loans: These are the loans that will accrue interest while you are in school.

Tip Two - Borrow Only What is Needed

In addition to the Stafford loans, some students' parents will utilize a Plus Loan or a student will take out a Private loan to help cover the remaining balance.

While these loans can be used to fill the gap (total Cost of Attendance minus all other Financial Aid being received), it is not always necessary. It is strongly recommended that you only borrow what you need. Talk with a Financial Aid Counselor if you would like help determining how much you need to borrow.

Tip Three - Stick with One Type of Loan

With the exception of Stafford Loans, it is recommended that you stick with one type of loan over the course of your years in school. Whether this be a Plus loan, Private loan, or through a Bank or a Credit Union, sticking with one type of loan will help reduce the number of monthly payments you will be making in the future.

To compare Plus Loan and Private loans, please visit our Loan pages for Undergraduate and Graduate Students.

If you are pursuing a Private Loan, here are some helpful tips to consider when looking at lenders:

You may need a co-signer.
- A co-signer is a person that will be required to make payments on the loan if the main borrower does not make their payments.
- You typically need a co-signer because you may not have enough credit history built up yet.
Research Private lenders and take your time on the applications.
The loan application process can take some time:
- If you are pursuing a Private Loan consider these steps to prepare for your tuition due date:
  - 90 Days Prior: Determine how much you will need to borrow and look for a cosigner.
  - 60 Days Prior: Research Private lenders to find the best fit for you.
  - 30 to 45 Days Prior: Apply for the loan.
- It can take up to 30 days for the financial aid office to receive the funds after your loan is approved and all required documents are processed by your lender, so it is recommended to start early and follow this timeline if possible.

Tip Four - Consider Interest Rates

When researching loans, you will want to consider the interest rate. Federal Loans—like the Stafford and Plus loans—usually have a better interest rate than a Private lender. However, sometimes students or parents can get a lower interest rate with a Private lender depending on their credit score. This is why it is best to explore all of your options.

Is it a fixed or variable interest rate?
- A fixed interest rate will not change throughout the life of a loan.
- A variable interest rate will fluctuate throughout the life of the loan.
  - Variable Rates typically start off at a lower interest rate but it is more likely to increase over time.

Tip Five - Understand How Interest Works

It is important that you understand how your loan interest will work. For loans like the Plus loan, Unsub Stafford Loans, and Private loans the interest will start to accrue once the loan has disbursed to your account.