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All About Private Loans For College
Being accepted into the college of your choice (or second or third) can seem like one of the most wonderful beginnings in your life. College life will open doors to new courses, friends, independence, and on and on; however, getting in is just half the battle. Don’t get me wrong: a good pat on the back for working hard enough to be accepted is well, well-deserved on your part; but once the congrats have been had..it’s time to start thinking about how you will pay for your next four years of higher education. There a variety of student loans and grants available for incoming college freshman, so start your homework early. In this article we will discuss the private or alternative college loan: what it is, and how it may help you.
Typically, students looking for financial assistance start by finding out which government student loans they may qualify for. Unfortunately, though you may not be able to afford all of your college experience (tuition, room/board, books, etc), the government may not think you qualify for full financial assistance. This is when student loans from private sources and companies come in handy.
Private and alternative student loans come from banks, credit unions, and other financial institutions that will offer to lend you college loans based upon your credit (or family’s credit); and are used often to supplement federal loans and assistance a student may already be getting for their college education.
So who is eligible for the majority of these alternative college loans? In the matter of private or alternative loans, having more financial income will only help you (where as in federal loans, cut off for eligibility is based on financial need) to receive assistance; however, you (and/or your cosigner) must have established and good credit to receive the loan. Other stipulations beyond this major one include: being a U.S. citizen, at least 18 years old, and already be enrolled at an accredited school. Again, once you fit these eligibility requirements and deem yourself a good candidate for an alternative loan, the journey is done just yet.
Here are a handle of significant tips to consider during your research, application, and repayment of your private or alternative student loans:
• Before you decide that a private loan is for you, make sure you make a thorough budget for the next four years of your education. Be sure to list how much of your expenses will be funded through federal loans, family contributions, and any other non-loan resources there may be. Once you have exhausted all your resources for possible college funding, you’ll have the number you’ll need to fund through alternative or private loans.
• Start researching different available private loan sources (i.e. banks, credit unions, etc), and measuring them against eachother for repayment length, terms, and interest rates.
• Always remember that these loans represent real money that you and your family will have to repay, and the terms and amounts of the loan much be reasonable when considering what you afford to pay back and when and for how long.
• Be aware that there are private loans that defer monthly interest payments until your education has been completed. Research these if you are not sure if you’ll be able to make monthly payments while in school.
• Lastly, remember that signing a contract for a loan of any sort is just that: a contract, and must be followed according to the terms you initially agreed to. Failing to do so will result in negative credit ratings and the inability to obtain car, home, and credit card loans in the future (an average bad credit mark can follow the loanee for approximately 7-10 years after they default on their loan payment).
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