Jun 25 2017

Private Student Loans, Private Loans for College. #scholarships #for #college

#private student loans

Introduction to Private Student Loans

Introduction to Private Student Loans

Private student loans can be a great way to cover the cost of attending college when savings, scholarships and federal aid aren t enough. Private loans for college can be used to cover school expenses such as:

  • Tuition
  • College Dorms/College Apartments
  • College Textbooks
  • Student Travel (to/from school)
  • Lab Fees
  • Student Computer
  • Study Abroad
  • College Food

Private loans for college are credit-based student loans that aren t backed by the federal government. Unlike the Stafford Loan for students and PLUS Loan for parents, private student loans aren t affiliated with the federal government, making it more like a traditional consumer loan. Private student loans may have less paperwork than a federal loan so it s generally faster to apply. Federal student loans are usually a better deal for students, but the federal government has low borrowing limits, which may not cover your total cost of education. So if you still need financial aid after you borrow federal loans, that s where private student loans can help!

Why use Private Loans for College?

Although free money and low interest federal loans are obviously the best ways to pay for college, they often just aren’t enough. Not all students qualify for scholarships and grants, or may not be able to acquire enough to cover the total cost of college. Federal loans have annual borrowing limits, based on your grade level and student status. Unless you or your parents have additional cash or savings, you will probably need to borrow private loans for college.

Private student loans may be a less expensive financial option than using credit cards, personal loans or home equity lines of credit. Private loans for college may also have loan terms established specifically for students, compared to other financial vehicles. Some of these terms may include in-school deferment of payments, no pre-payment penalties, hardship deferment/forbearance options and school certification processes.

When to Use Private Student Loans

Students may need private student loans when there is a gap between the cost of college and financial aid awarded (including free money and federal aid). The more expensive the school, the bigger the gap can be. As an example, the average annual cost for a 4-year private university totals $42,419 for the 2014-15 school year 1 .

Now, let s look at an example below of a college freshman s financial aid award package. In this example, at the average annual cost of a 4-year private school, a college freshman would still need $23,419 annually to pay for school.

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