Private College Loans
Repayments, application, types available, grants
When organizing your college finances, one option you have as a student is to take out a private college loan. Within this section we try to answer all the frequently asked questions about lenders as well as the pros and cons associated with this form of financing.
Why take out a private college loan?
It is a way of boosting your funds if there is a gap between the money needed to see you through college and the money that you have through grants, parental support and/or any other income you may be in receipt of. Most people opt for his type of financing if they are not eligible for a federal loan from the FSA.
Are private loans better than federal loans?
Every student’s circumstances are different and it is therefore impossible to say which one of these two types of loan is better. Federal loans are offered at relatively low rates of interest and typically offer borrowers good repayment terms, however that does not mean that you cannot find a good deal with a private lender. The key is to shop around, do you sums and compare all the various options until you arrive at the product that suits you best and costs you the least.
How much can I borrow?
This is usually calculated by subtracting the total cost of your education by the total funding that you already receive. This is the maximum amount that a lender will let you borrow, but you are free to borrow less if you so wish.
Do I have to start repaying the loan while I’m in college?
Most lenders will allow you to defer your repayments until you have finished studying. Some will even grant you a few months post-graduation before you have to start paying. So unless you particularly want to begin to repay the money while you are still at college, you shouldn’t have to. Bear in mind that all lenders will have different terms and conditions and you should always check these to establish what the repayment terms are.
How long have I got to repay the loan?
Again, this will depends on which company you took out the loan with, but it is quite rare for a lender to offer you a repayment term in excess of thirty years.
Can anyone apply for a private college loan?
Students can take out the loan themselves or their parents can borrow on their behalf (see college loans for parents for more details). When you make an application to a lender, they will check your credit rating. If you or someone in your family or household has a poor credit history your application may not be approved.