Private Student Loans
Private student loans are offered to students, who are required to agree to future repayment and all terms and conditions set by the lender. When borrowing through a private student loan, the student will be required to meet all loan requirements and to sign a promissory note.
For students who have exhausted their federal and institutional loan borrowing capabilities, good alternative financing can be sought in the form of private student loans. There are many different private loan programs, which are available to both undergraduate and graduate students.
Loan limits are generally higher than those traditionally offered through federal borrowing programs, however the interest rates tend to be higher than federally subsidized loans. Repayment schedules will vary tremendously from program to program. No payments are required while the student is in school and are deferred for up to 6 months from the time the student leaves school.
In addition to these differences, private loans will almost always require a co-borrower for undergraduate students and those graduate students who lack a credit history. This is distinctly different from most federal loan programs, which do not require a credit check for the borrower.
Using a co-borrower may or may not be required, depending on the specific situation. Even if a co-borrower is not required, some students may actually see their interest rate and associated loan costs decline when they opt to utilize a credit-worthy co-borrower.
Private student loans are unsecured, and they are also not federally guaranteed. One of the similarities between private education loans and federal education loans is that both are almost exclusively available to U.S. citizens and eligible non-citizens only, unless a U.S. co-borrower is available.
In most cases, private student loans are available to students enrolled on at least a half-time basis at an approved educational institution. While these loans are an excellent alternative for students who need additional financial resources to pay for school. These loans are less expensive than lines of credit and other types of non-educational loans. However, private loans should only be borrowed once a student has taken full advantage of what the federal and institutional loan programs have to offer.