Thinking About A Private Loan?
Private education loans are often used to close the gap between educational cost and the amount of federal assistance you have received. Private lenders offer these loans; eligibility is based on your credit score. The interest rate will be variable and there is no cap. Applying for private loan with a co-signer may help you qualify for better terms.
Private loans are generally more costly and have fewer benefits than federal loans, although they can be a better alternative to using credit cards for education costs. Most private loans offer deferred payments until you leave school and often have flexible repayment options.
Be sure to understand the full impact a private loan will have on your financial aid package and your budget. Some lenders offer private loan in excess of the cost of attendance. Taking such a large loan may reduce the cost of attending school.
Consider alternatives to borrowing a private loan. Use savings, a part time job, a loan from a family member, a home equity loan or simply take steps to reduce the cost of attending school.
If you are choosing a private loan and are faced with few options, determine which loans is the best deal for you. If you plan to pay the private loan off over the usual 10 years, choosing a loan based on a lower interest rate rather than the low upfront fees will generally be less expensive. Before accepting a loan, be sure to review all terms and conditions. If you are unsure of the true cost of borrowing, or the effects on other aid, ask your financial aid office.
Ask prospective lenders these questions to help ensure you make the best choice: