Private Education Loans

Changes in the educational system have forced many would-be students to consider their options. Gone are the days when the educational schools, colleges and universities paid all fees. Students are now required to pay at least some of the costs themselves. This is proving to be a huge burden to students at a time in life when there are plenty of stresses and strains in learning, not to mention hormonal levels. This can be a step too far. It is difficult enough for adults to get their heads around the different types of loans but to a novice such as a student, it can seem impossible.

Some money is available to students by way of federal loans and grants, but these will not generally pay the full amount required for study over the years in college. These loans are preferable as the government backs them in the event default on payment is made. However, many students need to find an alternative source of finance and that is when many turn to private education loans.

Do I need a co-signer for my loan?
When applying for private education loans sometimes it may be necessary to have a co-signer, particularly if you are a foreign student. The co-signer must be a resident citizen in the US and someone in good standing and with a good credit record. The role of the co-signor is to guarantee that you will meet the repayments of the loan. If you default on them, then the co-signor has to make the repayments on your behalf. This can strain the relationship at the very least. Generally if you are a US citizen and a student you can apply for a private education loan yourself without a co-signor, although this will be subject to the criteria defined by the loan company.

How much should I borrow?
How long is a piece of string? There is no pre-determined amount that you should borrow. Some students may need more money than others. This could be due to a number of factors. However, it does not matter how much you are offered for your private education loan, you do not have to accept it. You may apply for the loan and the company may decide that you can have more than what you actually want. This is very tempting indeed, and many students will take them up on the offer. However, it would be best to borrow the minimum amount you think you will need. This will not only help you in terms of budgeting, but it will also reduce your overall student repayable debt.

Many students are leaving colleges and universities with a huge amount of debt, sometimes more than $18,000. This is a significant sum and it will take some time to pay off. If you are lucky you may be able to get a very well paid job and meet your repayments easily. This may also enable you to reduce the term of the loan too. However, for some this is not the case and they maybe still paying for the loans well into their 40’s or 50’s.

Consolidating loans
Sometimes it is tempting to get several loans when you have used all the money supplied by one and you need more to cover tuition fees, expenses or bills. There is a way to consolidate payments and reduce your overall outgoings. The best thing to do is to obtain a consolidation loan that allows you to pay off all the other smaller loans. This means you have just one outgoing payment to make and usually at a lower interest rate too. Therefore, you can pay off your debts in one single payment and reduce your monthly outgoings.