When it comes to applying for a private college loan, it’s important to know your options when it comes to a lender to choose, the types of loans to take advantage of and getting the best deal out there.
This is a loan issued to students and parents for paying college expenses by banks and other financial institutions. These loans are not guaranteed by the federal government so the loan benefits to students are not as great as student federal loans.
Due the nature of these types of loans, they are a risky investment to banks. This is why you generally will not see smaller banks offer student loans. These types of loans are offered by the big banks who can manage the risk better.
Because of the risk to the bank, these loans can be more difficult to get accepted for especially on favorable terms. The greater the risk to the bank, the worse the terms will be to the student.
Have you exercised all your options before considering a private student loan?
These loans are available from the big players in student loans such as Citi, PNC, Discover, Citizens, Sun Trust, Wells Fargo, Union Federal and Sallie Mae.
Each one of these banks has there own programs and guidelines they use to issue student loans. I urge anyone shopping around for one of these loans to do their homework and look for the best option available to them.
The Sallie Mae College Loan is one of the biggest and most popular issuers of private college loans. They’re the only lender that issues both federally backed student loans and private student loans.
Sallie Mae was once part of the federal government primarily issuing, administering and collecting repayments on government backed loans until it went private in 1997. Sallie Mae is one option worth looking into.
These loans verify your college tuition expenses and disburse your loan directly to the school and then get applied to your tuition bill. Because of this, your loan terms can be much more favorable. But your flexibility is limited to what you can do with the money since it goes directly to the school.
These loans are disbursed directly to you, giving you the flexibility to pay for what you want. This benefit to the student presents a little greater risk to the bank so the rates and terms are not as attractive as a school channel loan.
A private college loan can have a fixed or variable rate attached to it. Variable rates typically start low and attractive until certain economic conditions increase them. See if there is a ceiling on the variable rate loans you’re looking at.
Ask if there is a deferment period (grace period) usually while in you’re in school or after graduation when you have to start repaying the loan.
Also find out if the lender offers options for flexible repayment plans. This can really help you if you experience any unforeseen economic hardships.
I strongly recommend bringing in a cosigner for your loan. This will help reduce the risk on your loan to the bank which will help you get approval for the loan and it will also help you get much lower rates.