Is An Alternative Student Loan For You?
Private college student loans are typically referred to as college student loan alternatives. You can use private college student loans for any higher-education related expenses (tuition, room and board, books, computers, and past due balances). You may also desire to use private college student loans to supplement your federal college student loan or other forms of financial aid if they are not sufficient to cover the full cost of higher education.
Alternative student loans are good options for students who prefer not to borrow money, but not from the government, or who have not been fortunate in obtaining grants and scholarships from both private and public foundations. The interest rates could be slightly higher than say a federal Stafford College Student loan or a Perkins College Student loan, but if the student, or his parents, has a good relationship with a private lender, the rates and terms could be negotiated…and often in a friendly manner.
A private college student loan is sometimes called an alternative college student loan and could be any type of loan, provided it was not obtained from a government source. Given this distinguishing characteristic, a private college student loan could be a private college student loan for a student with bad credit, a no credit check student loan (“that’s okay, we have your parents’ signature card on file”), or a graduate college student loan – for students wanting to pursue a master’s degree.
Whatever form of private college student loan you apply for, remember that a loan is a loan, no matter what it is called. This presupposes a commitment on the part of the lender to make available a definite amount of money to be placed at the lender’s disposal; and for the same reason, it presupposes a commitment on the part of the borrower to pay the college student loan back. The payment terms and schedule are usually outlined in the loan agreement. These elements make a private college student loan a legal obligation, a valid contract, if you will. Both borrower and lender therefore are bound by a legal document that cannot be breached, unless for a very justified reason.
If you compare the interest rate of your private college student loan with that of the interest rate of your classmate’s federal government college student loan, you may notice that his rate is lower. This should not come as a surprise. The US government has a college student loan program that gives all US citizens a right to an education; see: http://studentaid.ed.gov. In addition, to make that right an affordable right and accessible to all, the rates on government college student loans are usually much lower than a commercial.
Some private college student loan lenders advertise their private college student loan programs in such a way that the student does not have to feel cornered about applying for a private college student loan – lenders say there are no application fees, no application deadlines, the college student loan amount can be paid after graduation, and that the funds are sent directly to the student’s account and not to the school. The approval for a private college student loan will be given in just a couple of hours or 24 hours, according to some lenders.
Before you sign on the dotted line for your private college student loan, make sure you scrutinize the loan agreement.
