Many students find it necessary to take out one or more college student loans to pay for their education. While a federal student loan is more desirable because of the lower interest rates, you may not be eligible for one, or the loan granted may not be enough to cover all your expenses. You may have to apply for student loans from private lenders.
Before applying for college loans from private sources, you should first seek out other avenues for financial aid, including government and institutional grants or scholarships, private scholarships, Stafford or Perkins loans, work study, and PLUS loans for parents.
Prospective students should fill out the FAFSA (Free Application for Federal Student Aid) before considering a private college loan. A federal loan offers many benefits such as low interest rates, deferment of payment until graduation, need-based aid, and flexible repayment schemes. If you do not qualify for a federal loan or you still need more funding for your college expenses after you have applied for these types of financial assistance, you may have to consider a private loan.
Finding a private college student loan is not a problem. Many financial institutions, banks and credit unions offer loans for college students. The trick is to find the best loan for your needs.
One of the things to consider is the interest rate. Aside from looking for low rates, you must find out if the rate is fixed for the term of the loan, or if it is variable. If the rate is variable, find out how high it can go. Be on the lookout for fees that may be included in the loan.
Look for private loans for college students that offer a variety of repayment plans. Federal student loans have flexible repayment options including deferment, interest-only payments, and interest and principal payments. Deferment means that you begin paying interest only after you graduate.
Interest-only payments allow you to pay only the interest immediately after taking out the loan. You start paying for the principal only upon graduation. With the interest and principal payments option, you start paying both interest and principal immediately.
You should try to find a private lender that can offer you the repayment option that you want. You should also make sure that the lender does not charge a penalty if the loan is paid off early.
To qualify for a college student loan from a private source, you must be at least 18 years old with a good credit rating. Students who do not have any credit history may need a co-signor, such as a parent, to be able to take out a loan. Applying for a loan should be a simple process.