If you’re like many parents of high school seniors in June, you’re ready to move forward in paying for the school your student will be attending in the fall.

There are a lot of options, and by now you’ve probably heard of many of them. Will you use a home equity line of credit (HELOC), federal loans, or private loans?

Most families will have to use a combination of funding, and that will include at least some private student loans.

Here’s what you need to know before you apply…

How Much Do You Need?

Don’t make the mistake many parents do and only consider funding the freshman year. That may seem like the biggest hurdle, but when you borrow you need to think about the entire college career.

It’s vital to be responsible about the amount you’re borrowing – not just this year, but in the future as well. Once you have a projection for how much you and your student will need to borrow to cover all four years of college,

it’s important to estimate what the monthly payments might be.

Understanding how to calculate loan payments is an invaluable skill. Using our Student Loan Calculator tool can help your student understand the salary they will need to earn in order to afford the monthly loan payment. And if you plan to have your student be the primary borrower on most or all of the loans, this calculation is even more important. What will they be able to afford with an entry-level job? How much will you have to help?

What will it take for them to become creditworthy enough to remove you as a cosigner?

Find the Best Rates

Remember that interest rates are the biggest part of a loan’s cost, but not the only part. Don’t be fooled by lenders – federal or private – that seem to offer lower rates but have origination fees (also called “disbursement fees”), application fees, and other costs.

One way to make sure you’re getting the rates you need is by getting prequalified by as many lenders as possible. All lenders will give you a general range of rates, but knowing exactly what you will get can be difficult.

Prequalification solves this problem without requiring a lengthy application process. By using a few simple questions and a soft credit hit that doesn’t affect your score, you can find out if you’ll be approved and what rates to expect before you apply. College Ave’s prequalification tool is one great example of a lender offering this feature. Any family considering private student loans should take advantage of prequalification to have better information on their credit approval, interest rates, and eligible cosigner.

Weigh Other Options

Of course, there’s more to a great loan than finding the best interest rates. For instance, you may have limited repayment options if you’re not careful.

Once a private loan is disbursed to the college, interest will start to accrue. Make sure that full, immediate repayment isn’t the only repayment option offered. Deferring payments while you’re in college may be necessary for some students, but making payments equal to just the interest– or even a small fixed payment amount – can help keep the loan balance under control while your student is still in school.

A lender like College Ave will let you choose from a variety of all these repayment options.

You can also look specifically for lenders that allow you to choose repayment length, for how long you want to choose to pay back the loan.

Having a variety of repayment durations helps you choose whether it’s more important to save on the total interest you’ll pay on the loan or to have low monthly payments.

Be Ready to Cosign

Most private student loans can be in your child’s name, but will require a cosigner. College students rarely have the income and credit history needed to get a loan on their own.

With that in mind, when it’s time to apply make sure you have the documentation you need as well. You’ll need to prove your identity, income, and creditworthiness. In many cases the cosigner must also be a U.S. citizen or permanent resident and over the age of 18.

Anyone can cosign a private student loan if they are creditworthy, but it’s important to choose someone – like a parent or close relative – who understands the situation and won’t allow the debt to drive a wedge in the relationship.

Of course, make sure you know what conditions need to be met for cosigner removal before you apply for the loan.

Once You’re Approved

Congratulations! The private loan is approved. If your student is the borrower and you are the cosigner, you will both need to finalize the terms of the loan and sign the paperwork.

This is where the repayment term, interest rate, and repayment options are made permanent.

If you’ve applied and been approved online, you can sign the paperwork electronically.

This helps you save time compared to printing and mailing the papers.

After you’ve signed the loan paperwork, the lender will work with the school to certify the costs. This ensures you don’t borrow more than is needed for school. After certification, the loan will be disbursed to the school.

Often this is done in two parts – one to cover the fall semester, and one to cover spring.

That’s it!

Your student’s college bill is paid for and he/she is ready to start school. When it’s time for sophomore year, the process will be repeated.

Once again, it’s vital to find the right lender, choose the best terms, and make sure the debt is comfortable for the borrower.

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This post is sponsored by College Ave Student Loans.

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