What Is A Private Student Loan?

One option for financing your college education is the private student loan. This type of loan can be either the sole source of financing or can supplement federal loans for students. Most people go the second route, and use private loans only after all federal loan and grant opportunities have been exhausted. Examples of federal loans include the very common Stafford loan, the Perkins loan and the PLUS loan. Federal loans have many advantages which is why students should turn to them first when in financial need. Federal grants are also helpful as they are funds that are not repaid.

When you get a private loan, the interest is determined by the bank, credit union or lending institution that provides the loan. This rate is usually based on credit worthiness, and the risk the institution believes they are undertaking by providing the loan. The decision to grant a student a private loan is a difficult one for private lenders because the majority of young college students do not have a sufficient positive credit history or substantial income. It helps to shop around and compare interest rates from different lenders before applying. Also, your chances of approval are higher if you have a co-signer (such as a parent) with steady income and good credit.

There are many things to consider when shopping around for this type of loan. You will want to look at the interest rates through the entire term of the loan. Also, payment options are another factor. Private loans often require payments to begin immediately rather than after graduation as some federal loans do. Some private lenders may offer helpful incentives to students based on a favorable record of payments over time. And finally, make sure you know what the origination fee is, which is added to the total cost and is a fee charged for creating the loan for the borrower.

For the majority of students, the private student loan should only be pursued after all federal funding has run out. In order to obtain federal student loans, you must complete a FAFSA, which stands for Free Application for Federal Student Aid. This all-in-one form is used to qualify students for loans, grants and any other available federal programs, such as work-study. There may be additional applications and documents required by your college or university.






 

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Despite Concern, Banks Give Student Loans the Old College Try - Wall Street Journal

Wall Street Journal
Despite Concern, Banks Give Student Loans the Old College Try
Wall Street Journal
Wells Fargo & Co. and Discover Financial Services, which are among the nation's largest student lenders, have also said they want to expand rather than shrink in student lending. The cost of college continues to rise and private student loans provide .
RBS Citizens expanding student loans businessPhiladelphia Business Journal

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Making $300K and getting financial aid for a first grader
Private schools are getting flooded with financial aid applications, and a growing number of the parents seeking help are earning $150,000 or more a year...


Learn how student financial aid payments left GRCC with $1.8 million in bad debt in the 2010-2011 academic year
Administrators at Grand Rapids Community College are trying to reduce the amount of debt it accumulates when students who receive financial aid drop out of school...


Number of the Week: Student Loan Bubble - Wall Street Journal (blog)

Number of the Week: Student Loan Bubble
Wall Street Journal (blog)
By Phil Izzo 368%: The jump since 2007 in the measure of consumer credit held by the government comprised primarily of student loans. If a student loan bubble were to pop, the government, not private banks, would be the one standing around with gum in .

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Schaffler, dean of financial aid, to step down
Laurie Schaffler, GS 92, is moving to Seattle to live near her two daughters, one of whom is pregnant with Schafflers first grandchild...


Congress needs to protect student loans - The Herald | HeraldOnline.com

U.S. News & World Report
Congress needs to protect student loans
The Herald | HeraldOnline.com
Like many disputes in Congress, the standoff involving a hike in student loan rates is deeply partisan. Unlike some others, this one carries high stakes. It directly affects the pocketbooks of millions of households throughout the country with one or .
Student Loans: Is There Really A Crisis?TIME
The Student Loan DebateHuffington Post
Student Loan Changes: What You Need to Know NowU.S. News & World Report
Hattiesburg American -Washington Post (blog)
all 145 news articles »
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2 Wash. scholarship programs aid the middle class
A popular book a few years ago advised middle class parents to forget about saving for college. The author argued that since the federal government deducts a percentage of savings from the amount of financial aid for which a child could qualify, they could lose money in the end...


Fitch Affirms All Bonds of SLM Student Loan Trust 2003-5 - MarketWatch (press release)

Fitch Affirms All Bonds of SLM Student Loan Trust 2003-5
MarketWatch (press release)
NEW YORK, May 18, 2012 (BUSINESS WIRE) -- Fitch Ratings affirms the senior student loan notes at 'AAAsf' and the subordinate notes at 'BBsf' issued by SLM Student Loan Trust 2003-5. The Rating Outlook on the senior notes, which is tied to the sovereign .

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Student loans an obligation that's impossible to escape - StandardNet

StandardNet
Student loans an obligation that's impossible to escape
StandardNet
If he had the ability of foresight, he would have said, "In this world nothing can be said to be certain, except death and student loans." As an obligation that is impossible to escape, nothing is quite as tenacious as student loans.
Are parents responsible for educational loans?Ahwatukee Foothills News
Government talks to AIB about public-private partnership for student loansthejournal.ie
The story behind Trinity's proposed student loan schemeThe University Times
Hartford Courant
all 7 news articles »
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