Private Student Loans to Help Pay for College

Private Student Loans to Help Pay for College

by Evelyn Saunders

Besides loan scholarships offered by the individual colleges, among the many other student loan options available to pay for tuition are Perkins Loans, Stafford Loans, the Federal Direct Loan Program, Parent PLUS Loans, Graduate PLUS Loans, Consolidation Loans, private loans or alternative loans, and work study loans.

If you have qualified for a scholarship or a federally funded grant or loan, you still may need more cash to pay your school bills. Private student loans offered by some banks and other private lenders may find you that money. Lenders offering alternative student loans for college financial aid and private loan consolidation can be found through various websites on the internet. However, before tapping into private student loans, you should almost always maximize your borrowing from federal loans first. The interest rates on federal student loans are limited to a relatively low percentage. Private loans are at higher interest rates. Quite often the interest on private loans may be capitalized which means it will be added to the loan principal. Depending on the number of times this is charged during the length of your loan, this will increase the amount of money ultimately borrowed.

Approval and terms for private student loans are based on your credit history. If you have no credit or your credit rating is bad, you might need a co-signer to qualify for this loan. A higher interest rate on your loan usually accompanies a poor or minimal credit record. Additionally, fees and penalties can be higher than with government-backed loans. And your repayment terms may not be as favorable. Because of these conditions, taking out a private loan should be used as a last resort and keeping it only as a small portion of your financial aid portfolio would be smart.

Another option to consider for getting more money for tuition is work study programs. These part-time jobs are assigned by your school. They are for both undergraduate and graduate students and can be right on campus or off campus. The jobs off campus may require relevance to your major or public interest. Wages are determined by the difficulty and required skills involved and start at the miniumum wage rate. The number of hours you may work is determined by your need, how early you apply and total amount of work study funding at your school.

As mentioned earlier, there is helpful information available about private student loans on the internet. Visit www.student-loans.net where you can research student loan companies and compare what is offered and involved with each option. Sometimes the choices can be overwhelming. This site will help you with the process. It also contains helpful tips for students and information about campus life.