Student Loans-All about Private Student Loans

March 16, 2009 by  
Filed under Student Loans

A lot of federal student loan programs do not make credit checks and provide ample sums of student loans. Unsubsidized student loans, where interest is accumulated while the student is studying, are those that are most wanted.

However, these student loan programs are based on needs and come with various criteria that might make qualifications a bit difficult. And even when students do qualify; in most cases, the granted student loans will only pay for a small amount of the total education cost. In this case, students should turn to private student loans, in order to make up for the difference.

Private student loans have their share of advantages and disadvantages, too, though. A credit check is strictly required and if a good credit history is found, then there is never a problem. However, ‘good’ is a relative term, and borrowers might find themselves paying for more than ideal interest rates.

Interest rates aside, there are also several other financial implications that come with private student loans. Additional fees are usually asked for with nominal student loan amounts. A simple student loan of $4,000 may get 4% in fees added before it is granted, meaning that the borrower never sees $160 of the total amount, but pays for it anyway.

But, there are certain benefits that come with private student loans, as well; most obviously, that the funds are available. Private lenders are there to gain profit from interest and fees that they ask for. They want to make money available to those who need it. Consequently, they will work hard to make sure that the applicant is qualified. On the other hand, federal lenders have inflexible criteria and there is no point in trying again once you have been rejected.

With private student loans, you will also not have to deal with such illogical and impersonal bureaucracy. Private lenders have customer service departments that are there to answer any questions asked. Usually, federal student loan programs also have contacts available for help, too. Unfortunately, the answers cannot always be relied upon.

There are other convenient considerations apply that make private student loans more desirable.

Private student loans are much simpler, making the entire process much easier. For instance, there is no need to fill out the Free Application for Student Aid (FAFSA) forms and no need to supply additional documents. Interest rates and fees could be lower or higher, depending on the student loan program.

The most wanted private student loans simple have no interest rates or fees that are 1%. Make sure you check for any fees since they could add a lot of money to the student loan.

To get a great student loan, it would be ideal to have an impeccable credit history or to get a student loan with a co-signer who does. To find out what is available for you, this website is great place to start: http://www.finaid.org/loans/privatestudentloans.phtml

You can also use a student loan calculator, if you wish to run through your own sample scenarios. You can find one at: http://www.bankrate.com/brm/rate/calc_home.asp
Make sure you include all the actual costs through the entire lifetime of the student loan, in order to get a proper picture of the real cost.

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