What Does APR Stand For?
So many students depend on the acronym APR, in part, to get themselves through college. APR is shorthand for annual percentage rate. When a student is trying to decide whether or not to sign onto one loan over another, one of the most important factors involved is the APR. The APR spells out exactly how much a student can expect to pay in a year in interest alone. This is important because all borrowers should aim to pay the least amount in interest possible.
The Truth in Lending Act in the U.S. governs the calculation and the disclosure of APRs from lenders.
When a borrower understands the impact of APR, the borrower is better positioned to make wise choices when deciding on a student loan. Taking out a loan with an unsavory APR can cost a borrower thousands of dollars that he or she would otherwise not need to spend.
One good way to evaluate the loans you are considering against one another is to use SimpleTuition’s Student Loan Comparison Tool. This tool will allow you to take a closer look at all of the factors involved in each individual loan you are considering, including the APR for each loan. While the information regarding each loan might seem muddled when you examine them all one at a time, the tool can bring clarity to the process of choosing a student loan and help you to make the decision that is best for you and your family – one that won’t cost you extra unnecessarily in the end.
Other Important Loan Factors to Consider
APR isn’t the only factor you should evaluate when you are considering which student loan to take out. You should also be sure to take a look at other details of the student loan you are considering, including:
- Is the loan private or federal? This can make a difference in several ways, including in relation to interest rates and the kinds of penalties you’ll face if you default on the loan. Defaulting on federal loans, for instance, can result in the garnishment of your wages or the withholding of your tax return.
- Loan term. What is the term of the loan? Is it reasonable for you to believe that you can pay off the loan in full by the end of the loan term? How much will the interest on the loan cost you over the course of the term?
- Grace period. What kind of grace period does the loan offer? Many loans offer somewhere between six months and nine months of a grace period. A grace period is a period of time between the completion of schooling and the initiation of the repayment process. This period exists so that a student can have the time he or she needs in order to land a job suitable for his or her education level and degree before being burdened with the task of making monthly loan repayments.