Private Student Loans
Get Your Cash!
- Private loans for students do not come from a government program, but direct lenders.
- They can be used for any purpose, but are frequently used to pay off student debt, or to top up loan amounts.
- They are typically faster to apply for online, and require less paperwork to be completed.
Private student loans are considered as those that are not provided as part of a government funded study program. Instead, they are loans that are offered by banks and other traditional lending institutions with the purpose of paying for your education.
While you’ll normally have to be enrolled to take advantage of government student loans, there are a few private loan options available that will allow you to take out a loan after you’ve graduated. However, before signing on the dotted line for a private student loan, it’s essential that you know how the terms and conditions associated with them work.
Most times, it’s recommended that you work with government-funded loans before considering the option of approaching a private lending institution. Several government student loan programs have a range of advantages that won’t normally be available when using private loans.
Although you may be expected to provide something in return for a government student loan (such as working an internship, for example), you will usually benefit far more in the long run than if you had opted for private student loans.
Regardless of whether you opt for government or private student loans, it’s essential that you only borrow as much as you genuinely need for your studies.
Student loans are one of the easiest financing options to come by, especially where government loans are concerned. However, all loans will have to be repaid eventually – and this can be more difficult than you realise. This is why it’s recommended that try to borrow as little money as possible.
Additional information about Private Student Loans
Two of the most important factors that help applicants decide which types of loan to apply for are:
- Qualifying for a specific type of loan
- Amount of money that an applicant qualifies to borrow
The easiest type of loans to qualify for are those provided by the government because you won’t need to provide information about your credit history or supply proof of income when applying – most times, the government will be willing to provide you with a loan as long as you’re enrolled in some type of study program.
If you are keen to apply for private student loans, you or anyone who is co-signing on your behalf will need to have a good credit history – you don’t stand much chance of obtaining private student loans with a poor or non-existent credit history.
Although government loans are the easiest to apply for and obtain, they might not always be able to cover the cost of your studies in full. You won’t be able to borrow as much as you like because there is a limit that applies to this type of funding.
If you intend borrowing enough money to cover added expenses such as accommodation, study material and other fees, you may not be able to obtain sufficient funding through government student loans. Students who want to enrol in private colleges or learning institutions or who don’t reside in the immediate area may need to resort to private loans to ensure that they have sufficient funding.
Other differences exist between government student loans and private loans as well. The two main advantages of government loans are that they usually have lower interest rates and repayment terms are more flexible than those offered with private funding. Private student loans may be easier to obtain, but they have variable interest rates and stricter terms and conditions regarding repayment. Variable interest rates can sometimes make these loans more difficult to repay.
Refinancing and consolidation methods can also differ between private and government student loans. Government student loans can usually be consolidated, while private loans will have to be refinanced.
There may betimes where you will have to resort to obtaining private student loans to fully cover the cost of the course(s) you intend enrolling in. However, a prerequisite to qualifying for government student loans is that you will normally have to be enrolled at least as a half time student, and depending on the course of study you have chosen, government loan options might not always be available either.
In many cases, you will require additional funding after you’ve graduated. This is often not thought of as being an official student loan, but this type of funding can be extremely convenient for the time between graduation and securing employment afterwards.
An example of where you may require additional funding once you’ve completed your studies can include having to complete internship hours or pass an additional industry-related exam that will allow you to start working. Some private lenders will be willing to offer you a loan to cover expenses like these.
Less Paperwork needed for Private Loans
When filling in applications, you will notice that far less paperwork and information is required for private loans than for government loans. Government loans will require information about family history and finances, and some families might not be keen to share this that easily.
On the other hand, private lending institutions will normally be willing to provide loans without you needing to give information about family or financial history. You will still have to fill in a fair amount of paperwork, but it will certainly be less than if you were to apply for government student loans.
You’ll need to keep in mind that you will normally only be able to approach private lending institutions if you have an acceptable credit history and proof that you’ll be able to repay the amount you want to borrow. If you have a poor credit history are have not been able to build one up yet, you can normally still apply for private loans by working with a co-signer.
Also remember that many government loan schemes will be accompanied by various benefits that private lenders won’t be willing to provide – it may sometimes pay you to fill in the additional paperwork and provide the required personal information so that you can take advantage of them. Always ensure that everyone who is involved with co-signing on your loan understands what their responsibilities will be in this regard.