If you did not qualify for a federal student loan or your loan was not enough to cover your college expenses, don’t feel like you are alone. There are tens of thousands of students just like you. Instead, a private student loan could be your answer.
What Are Private Student Loans?
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Private student loans are designed to help you pay for your education. They are available from reputable financial institutions. Private student loans differ from federal student loans because federal loans are guaranteed by the federal government, while private student loan lenders base their decisions on the credit of the borrower. Here are some of the things to consider when you compare private loan offerings.
Private Lenders Are More Flexible and Have Higher Loan Limits
Private lenders do not have to meet federal guidelines, which means getting a private student loan opens additional opportunities for completing your education. Graduate, undergraduate, or non-traditional students can apply for private student loans.
There are no limits on how much you can borrow with a private loan, so you can attend a more expensive school, take longer to complete your education, or have more of your living expenses covered.
Private Lenders Do Not Have a Funding Fee
Unlike the federal student loans, private lenders do not have a funding fee. Therefore, you get to use the entire amount of your loan. This can make a difference in your budget.
Private Lenders Allow Cosigners
Because private student loans are not backed by the federal government, private lenders will require you to have good credit. If your credit rating is not good enough to qualify for a loan, private lenders will allow you to have a co-signer. With a cosigner, it is not your credit that determines if you qualify. It is the cosigner’s credit that the lender will look at. This makes it possible for you to get a better loan.
Unlike federal student loans, private lenders do not offer deferments or loan forgiveness, and payments start when you open the loan. Regardless of your future financial situation, you will be required to repay the loan. This means you will have to be financially responsible.
Private Lenders Have More Interest Options
Federal loans come with fixed interest rates. Private lenders offer both variable and fixed interest rates. The interest on variable-rate loans can change over time, but the original interest almost always is lower than fixed-rate loans. This means your payments will be lower when your ability to make payments is lowest. However, with fixed interest, you know what your payments will always be. Interest rates depend on creditworthiness and loan amount. Variable interest rates range from 3.75 to 12.99 percent and fixed rate go from 4.25 to 13.99 percent.
The options private student loans offer make them an excellent choice for financing your education. Before you give up on your dream of a college education or graduate degree, check out reputable private student loan lenders. Doing so could make a difference in your future.