As a wise student borrower, you should definitely try and exhaust all the possible options for government financial loans before you finally place your attention on the next possible kind of loan, which is the private or alternative loan.
Federal loans, as it is, almost always only partially cover the tuition and other school expenses. And therefore, because of the gap that such loans leave, the private personal student loans are the ones that fill it in. And it has indeed become a very lucrative market, albeit it is necessary for borrowers like you to find the best private student loans.
As in any other types of loans, the private personal student loans have advantages and disadvantages:
Advantages:
Especially with the best private student loans, 100% of the education costs and expenses can be covered.
Not all interest rates are high - some lenders let borrowers enjoy lower rates.
Low rates of private personal student loans are especially available if the college provides certification of enrollment and the loan check is addressed to the college.
FAFSA completion is not a requirement
Disadvantages:
Such loans, especially the best private student loans, are actually subject to extensive credit background checking. Your credit report will help the company decide of your application is approved or not. The amount of your interest rate is also dependent on your credit history.
The interest rate of the loan is variable and can increase during the duration of the private personal student loans.
It does not include the option to defer.
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2 Responses to 'Private Personal Student Loans: Advantages and Disadvantages'
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Good Post! I agree. Every college student needs to always remember to exhaust their federal options first. Even though it’s a headache, get that FAFSA done and then use private student loans to cover any additional costs.
Usually these costs wind up being living expenses, books and anything else not covered by federal loans/grants. Don’t forget about those Scholarships also!
Additionally, another advantage would be private student loans are typically sent directly to the student so you don’t have to wait on the school to process or say how much you can get.