Read This Before Getting A Private Student Loan

Read This Before Getting A Private Student Loan

by Elise Fisher

Obtaining a good education is one of the most critical things we can do to increase our effectiveness in the business world. It is the key that opens doors to new opportunities. It will allow us to help those around us and to change the world for the better. The problem is that obtaining a great education isn't free. Tuition alone can cost anywhere from $3,000 to $100,000 a year! Because of this, many students simply do not have the ability to pay for higher education and, therefore, are forced to investigate other options. Taking out a private student loan is an option that students may want to consider.

What is a Private Student Loan?

Private student loans, or alternative student loans, are loans that are taken from any source besides the government. Private student loans may be issued from banks, credit unions, or other financial institutions. These loans usually receive their funding from private financial organizations and are, therefore, not subject to Federal demands.

Private student loans are chiefly for those who decide against Federal student loans (such as the Stafford or Perkins loan) or who need a supplement for their Federal loan for the reason that it is not enough. If you choose to take out both a Federal and a private student loan remember that it will be more difficult to consolidate them later on.

The amount of money that can be borrowed from a financial institution depends on the credit history of the student.

How can I get a private student loan?

Each financial institution will have a different list of eligibility requirements but here are some of the requirements that you will likely encounter:

- You must be a citizen of the United States

- You must be eighteen years old

- You must be enrolled at an approved school

- You must have good credit OR have a cosigner that has good credit

Not all of the financial institutions will require these things and some of them will require more, but this is a list of the basics.

Prior to getting a loan:

SEARCH: Before you take out a loan remember to search around. Be wary of institutions that are only out there to rip you off. If an offer appears "too good to be true" than it probably is. Explore your options to be sure that you are getting the best loan and that it isn't a scam.

SCRUTINIZE: Once you've located the right loan, pull up a chair and examine the contract. Never put your signature on something that you have not read or haven't read completely. Really know the type of agreement you're making with this company. If you are confused about something, do not be scared to ask someone. Feeling slightly stupid up front is much better than feeling really stupid after you've had to pay an enormous amount of money simply because you didn't take the time to fully understand the agreement.

SIMPLIFY: Simplify your life by choosing to always pay your bills promptly. Failing to do so will enlarge your loan and your debt and add extra stress into your life. Deciding to promptly pay your bills every month will help keep you out of the deep abyss of debt and despair.