Are Private Student Loans Right for Me?

With higher education costs soaring, more and more students are turning to financial aid for help. Federal student aid offers grants, loans and other types of assistance. Federal aid is by far the biggest supplier of money to students for college. Federal loans include not only grants, but also campus-based loans, Stafford Loans, and PLUS loans for parents and graduate students. The problem is, a lot of students don’t qualify for Federal help and are turning to other sources for help with their college funding.

Nonfederal scholarships and funding may be provided by your state. Check with your school to see if you may qualify for one of the state programs. If you do receive Federal or State Aid, then you may still need more money. College is expensive and includes tuition, books, room and board, as well as travel expenses, bills and food. More students than ever are turning to Private Student Loans for financial assistance with all of the costs that college brings.

Private Student Loans are essentially like regular loans. You must qualify for the loans and may be required to have a cosigner. The difference is that Private Student Loans usually have more flexible repayment schedules to accommodate students. For example, you may not be required to begin repayment of the loan until after you graduate or withdraw from school. Rates can be quite good based on your credit history and income. Be aware that there are a lot of subprime loans out there, which can have very high interest rates and may not be the best option for you.

When you take out a Private Student Loan, you are taking on a serious responsibility. You must strictly adhere to the terms and conditions explained in your contract. Failure to make an on-time payment will be reflected in your credit history for years. Late payments or failed payments on loans are big influences on your credit score. On the other hand, being responsible with your payments and always making them on-time can help you establish a good credit history. Paying on your Private Student Loan can help you show future lenders that you are financially responsible and mature.

If you are shopping for Private Student Loans, you may want to avoid companies or advisors that push one product or one certain lender. Especially beware if the product being pushed is at a high interest rate. Shop around to be sure that what you get is actually the best thing for you. This commitment will last for years, so take your time shopping around. Check out sites that feature many lenders and offer multiple products so that you know they are not biased or influenced by any one company. Do your research and Private Student Loans could help you bridge the financial gap on your journey through college.


About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.

Types of Student Loans

If you’re in the market for student loans, you might be overwhelmed and wondering where you should start. The first step is to educate yourself about what types of loans are out there. Student loans are generally needed when financial aid runs out, or if you don’t qualify for financial aid. Compare each type and consider which loan will be best for you and your situation. There are two major categories: private student loans and federal loans.

Federal loans are provided by the government and there are a few different types that you may qualify for. You can get a federal loan directly from the government or from a bank or credit union. When you’re inquiring about these loans, refer to them as Federal Stafford Loans. It may be helpful to go directly to your bank and get some guidance as to which type is best for you. But, you can research this yourself and most likely be able to determine which one best suits your needs. Remember, these federal loans are income based, so check your eligibility before you proceed.

Subsidized Federal Stafford Loans are subsidized by the government. This simply means that the government agrees to pay the interest while you are enrolled in school. They will also pay interest for you if you later in life need to defer your payments. This makes lending you money safer for the banks and credit unions. They know that they are going to make their money. Therefore, because of the bank security, you can reap the benefits of lower interest rates, longer pay-off periods and government subsidy.

Unsubsidized Federal Stafford Loans are not subsidized by the government. Any money borrowed and the interest on that money is totally your responsibility. Interest rates can be very good and terms are geared to accommodate students. For example, payments may be able to be deferred in certain situations. Unsubsidized Federal Stafford Loans are meant for students that don’t qualify for a Subsidized Federal Stafford Loan, or for students who need more money than they can get from financial aid. This loan is not as narrow on incomes that qualify and almost everyone can qualify.

Talk to the financial aid department at your school. Your parents could qualify for a Federal Plus Loan to help pay for your college. If your income is very low, then you may qualify for a Federal Perkins Loan. If you don’t qualify for any type of federal loan, then you may consider private student loans.

Private student loans generally have an easier application process and offer special interest rates and terms to students as well. Private student loans are available to students and their parents. Private student loans can be obtained very quickly, usually within a few days. These loans are credit based and don’t rely so heavily on income guidelines. If you don’t qualify for student grants, financial aid, or if you just aren’t receiving as much as you need, then consider private student loans to help you pay for school.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.