Thanks to some reader suggestions. We decided to cover a few
more topics in the financial aid world. In my first blog on the topic, we
talked about a lot of myths and facts about financial aid, its uses and how
federal financial aid works. I wanted to take a look at the other side of
loans, private ones you can get through your bank or other financial
institution!
Private student loans can be obtained at almost any
financial institution – your local bank, credit union or companies like Sallie
Mae, Wells Fargo and Discover also offer different types of student loans.
Traditionally, private student loans are thought to cost more than a government
student loan. This is because many of these loans have a variable interest rate
(meaning it can change) and they can be more difficult to qualify for as credit
checks and co-signers are often needed. These private loans were and are often
used by students to ‘fill in the gap’ between their government loans and any
grants or scholarships they have received. However, many of the private lenders
are starting to aggressively compete for your business! Fixed rate loans are
not so uncommon anymore along with it being a lower interest rate. This is
great news for current and soon to be students thinking about their financial aid
choices.
When taking out a private student loan your number one
priority should be shopping around for the best rate and plan that fits your
budget and needs. Each lender is going to have its own loan program with
different interest rates, repayment policies, plans and qualifications. Don’t
go walking into the first place you see and take out a $50,000 loan! Go to
various lenders armed with questions: what is the rate, what are your repayment
options, how do you handle forbearance or deferment, is there a grace period,
how long do you have until you must start making payments, do you qualify –
just to name a few! Unlike government student loans where you have one amount,
one interest rate, one deal - private student loans are going to need a little
more foot work but with great reward!
Some helpful websites:
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