Private Student Loans
College is one of the most exciting times in our life, with the ability to enjoy time away from home, acquire knowledge you need for your future career and spread your wings. However, it is reported that the cost of university education continues to outpace the customer inflation rate, which puts an even greater burden on the shoulders of financially squeezed families. Therefore, it is common to hear students griping about their financial problems because of the high college tuition and living expenses. At that time, most students resort to student loans.
Similar to some other school loans, the private student loans which are credit-based and non-federal student loans are issued to students in order to help them pay for their college tuition, books or some other expenses when scholarships, federal student loans as well as grants are not enough. Many private student loans can help their applicants cover up to 100% of their school costs.
Generally speaking, loans can be the best solution for the following expenses:
- Rooms and board
- Living expenses
- Books and supplies
- Computer or some other electronics
Pros and Cons of Private Student Loans
1. Compared to Federal student loans that need to take several months to process and disburse, the private student loans offer quick processing which are more beneficial and effective for students with a heavy financial problem.
2. Just as what we have listed above, the private student loans can be used for multiple purposes. However, Federal student loans place limits on how the disbursed money is used.
3. Many private loan providers have private loan products tailored for you no matter what your student status is.
- Undergraduate students
- Graduate students
- Medical students
- Law students or some other professional degree seekers
- Continuing education students
- Students in high schools or private schools
4. Usually, students are able to borrow more money from private lenders than they can receive through government sources. When your education costs exceed the $3,000 limit annually, you can apply for a private student loan with an amount of $3,000 or $4,000.
1. Although the private student loans offer quick processing and flexibility, it requires above average credit scores of their applicants. While the Federal student loans do not have such a requirement.
2. The interest rates of the private school loans are much higher than that of a Federal student loan. Federal educational loans have fixed interest rates and more flexible repayment terms than private student loans.
3. Interest rates are destined to increase with the advent of financial crisis. So, private student loan rates may go up someday, because they are variable.
Private Student Loan Application Tips
If you are considering turning to private student loans, you had better shop around in advance. Although the interest rates of the loans are of much importance, they are not the only affecting factor for your final decision.
There are still some other things you should take into consideration before you opt for a loan issuer.
- Repayment policies
- Payment deferral options
- Default and late-payments penalties
- Interest-rate caps
To sum up, private student loans which are usually offered by credit unions, banks, private lenders as well as some other financial institutions do not offer the same level of borrower protections and benefits that government college loans do. As students, you had better find out scholarships and grants first for resolving your financial problems.
Get Ready to Apply Private Student Loans
Entering in the college gate for the new semester is a cheerful thing for all freshmen. Sometimes things can be different if you can not afford the high expenses for the college life. You may need an outside funding for your extended education. That is why you need a student loan.
Nowadays, student loan can be obtained through two main sources. One channel is supported by federal government with high requirement and relatively low interest rates; the later one is offered by many sources with high interest rate and less restrictions. Obviously, if you have no cosigner or credit score, the later one – private student loan may be your best choice. In the process of applying for the private student loans, you may meet some unpredictable problems such as discharged loan in the bankruptcy or forgiveness. Thus a short list is provided to guide you to get a better understanding of private student loans.
• As we mentioned above, private student loans are suitable for loan borrowers who have damaged or bad credit. Thus it seems a smart choice for them to apply private student loans for bad credit. Other students have inability to offer cosigners, thus they can search some quality loan leaders who can offer beneficial policies on private student loans without cosigner.
• For some no-income student loan borrowers, they may face heavy burden from lives and jobs under the circumstance of fierce competition in cities as well as high-interest private student loans after graduation. Some of them are even struggling under the basic line of living standard. Thus they are advised to apply some social programs related to private student loan forgiveness. Provided by some non-profit organizations, loan forgiveness programs are meant to reduce or cut off the total amount of loans.
• However, it is an unfortunate thing that they have tried several ways mentioned above but failed. The last resort perhaps is applying bankruptcy with discharged private student loans. In fact, there is a connection between private student loans and bankruptcy. You can report bankruptcy to the court and prove that you have no ability to repay the loan now and hereafter yet you tried every means to repay the loan.
Many students take out private student loans to supplement their federal financial aid. Federal student loans have some good points, such as high loan limits, quick approval and wide use. However, the disadvantages of private student loans cannot be neglected, either.
Federal student loan borrowers can apply for the total and permanent disability discharge as soon as they meet the eligibility requirements. Plus federal student loans will be forgiven in the event that the borrower dies. However, private student loan borrowers cannot enjoy these protections.
Just like federal student loans, private student loans also allow student borrowers to choose deferred repayment option. Students are not required to make payments while in school. Deferred repayment is a good choice for those who cannot afford to make payments at school.
As regard to private student loans, many people might mistakenly think that they are exclusively offered to college students. That’s not true. Though private student loans are mostly targeted toward undergraduate and graduate students, several private lenders also provide K-12 student loans, a kind of special education loan for students in grades K-12.
Most law schools in the United States do not offer bar preparation courses for students. Law school students always have to sit for the bar exam after graduation. To prepare for the bar exam, many graduates have to spend as much time as possible on studying.
When it comes to private student loans, many people would ask the same question: why not apply for a federal student loan? Without any doubt, federal student loans have various advantages over private student loans, like lower interest rates and more flexible repayment terms. However, one simple fact might be neglected.
A recent survey shows that almost 70% bachelor’s degree recipients borrow money to attend college. They get funds either from the government or private lenders. However various students find it difficult to pay off their student debt after graduation.
Interested in earning an MBA degree to develop your career? But have you ever considered the costs of an MBA degree? Let’s say, if you’re planning to attend a full time MBA program at Columbia Business School, the cost of attendance for Fall/Spring 2012-2013 is listed below.
New York Times released a report in May, indicating that Sallie Mae will offer fixed-rate private student loans for students and families who need extra money for college this semester. Fixed-rate education loan option has been added to the Sallie Mae private student loan section since May 21, 2012.
Private student loans can be an important source of funding for students who need financial assistance to complete college education. Most private student loans typically require borrowers to apply together with a creditworthy cosigner. It seems that the majority of private student loan lenders have tighten their credit criteria.