Only after maximizing and using all available not private funding resources should you consider taking on a private loan to pay for college.
To start with you'll need to be conservative and be sure to only borrow what you an absolutely afford. As with any loan, it is not just an investment but often a long term commitment. Ask a financial aid advisor about what kinds of private financial aid is available to you.
To qualify for a private loan you'll need to go through a full application process but before doing that I suggest you pre-qualify to see if you are eligible for the actual loan. This will eliminate any uncertainty right at the beginning so you don't waste valuable time. You'll discover the amount you can get and leave you feeling stress free and available to locate further alternative funding if the approved amount won't cover 100% of your anticipated or known expenses.
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Various loans are available but the main list includes these options:
Signature Student Loans
Tuition Answer Loan
Signature Student Loan for Community Colleges
Continuing Education Loan
Career Training Loan
Let's now take a closer look at each loan:
Signature Student Loans
Apply for if grants, scholarships and Federal Stafford loans haven't completely covered your total educational costs. To be eligible you must be at least half way towards a 4-5 year degree or attend a community college where you are working towards your degree. You also need to have maintained a respectable credit rating.
Many students do get approved. If your credit worthiness isn't exactly the most desirable then you could co-sign affording you a lower interest rate too. If your school vouches for your educational costs then a signature student loan can be increased according to your financial requirements.
You won't need to make repayments while you are still studying. This kind of loan is also available to international students with an eligible co-signer.
You may repay over 15 years or longer (usually at a 0% interest rate) and loan limits vary according to college and discipline: community colleges: $50,000; 4-5 year colleges: $100,000 - $220,000 including all private student loan debt.
Tuition Answer Loan
This loan allows credit worthy parents and students (undergraduate and postgraduate) to borrow from $1,500 to $40,000 to cover up to total college costs.
To be eligible you must have a social security number, be a US citizen and have good credit. You must also prove you are enrolled in a college with an official document i.e. tuition bill, class schedule printout.
If you are successful in applying for a Tuition Answer Loan then the checks will come to you, not to the school where you study. Collateral is not required for this loan and repayment options are flexible and can be deferred until after graduation. Repayment options vary but you must start repayments of the interest and/or the actual loan amount at least beginning at the half-way point through your course of study. Deferment must end after either 4.5 years or 6 months after graduation, but the later you leave it the higher the interest rate will be. The initial amount you borrow will determine your costs later on to a large extent.
A one-time fee is charged for this loan which is added to the loan amount at disbursement. The interest rate is Prime Rate and adjusted monthly and is calculated too according to your credit history and that of a cosigner if there is one. You will receive a 0.5 percentage point interest rate reduction after 24 on-time consecutive payments have been made.
It is recommended you apply for this loan with a cosigner to meet often strict credit requirements. It is wise to read the small print carefully so that you know what kind of agreement you are truly entering into.
Signature Student Loan for Community Colleges
Created especially for community college students, this loan is the most popular after-Stafford loan.
This loan is similar to the Signature Student Loan described above. Please reread the above to gain more clarity.
Loan amounts range from $500 to $50,000 aggregated. Interest rates are variable and based on Prime Rates. Depending on your credit history, repayment rates are 0% - 3%. You can repay your loan in full at any time without penalty.
Continuing Education Loan
Designed especially to suit postsecondary students not seeking degrees and part-time degree seeking students, this loan requires you be a US citizen and have a good, established credit history.
There is no maximum loan limit on a Continuing Education Loan.
The continuing education loan rewards good credit history with better interest rates and lower fees. You can repay over 15 years at the most. If you have a bad credit history, apply with a co-signer. There is no prepayment penalty and you may use your loan for tuition and other educationally related expenses.
Loan fees range from 0% - 6.5% With three types of repayment, this type of loan is flexible. With the standard repayment option (principal and interest), minimum monthly repayment is $30. With the interest-only repayment, you can repay only interest while in school and then the full loan amount in installments once you have graduated. You can defer payment too, as a third option, and pay a $10 deferment payment for each month that you want to defer payment, useful if money is tight during those long student days and nights.
Once again it is wise to read the small print before sending your application for this loan.
Career Training Loan
Specializing in training school, technical training or trade school, this loan is for continuing education programs. You must be a US citizen and have a good credit history. Interest rates and fees are reduced for those applicants with good credit ratings. Apply with a co-signer if you feel you can't meet the high expectations required to successful approval.
Once again there is no upper limit to the amount you can borrow. Loan fees range from 0% - 6.5%. For repayment options, see the Continuing Education Loan section above. You can pay the interest only while still studying, pay the full loan while studying or defer for up to 12 months paying a $10 fee at the end of each month of deferment
Conclusion
For all borrowing a good credit score is essential to lower your repayment costs. If you don't have the best credit rating, apply with a co-signer who does have a good credit rating. Private student loans are a final option after successful grant and scholarship applications have run dry. Be careful how much you borrow. You will obviously need to pay it back plus interest!
Good luck!
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