Private Student Loans Simplified

Private Student Loans Simplified
By Shannon Jones
An increasing trend among collegiate students in recent years is the use of private student loans to pay for college expenses. While the verdict is not in on this up and coming tactic, financial experts do agree private student loans bring some benefits to the table.

Unlike federally backed student loans, private education loans often have a faster approval period which means less waiting around for the borrower. Students are also not subjected to the treacherous financial aid application – the Free Application For Federal Student Aid (FAFSA) - required by the U.S. Department of Education to secure a Direct Loan. Borrowers can also get their hands on bigger funds – more than $25,000 in some situations – unlike the stricter borrowing guidelines of the PLUS and Stafford loan programs.

A private student loan also does not have tight application deadlines to meet. As long as the student is enrolled in an accredited college at half-time or more credit hours, or plans to enroll, he or she can apply for the loan whenever it’s convenient. In addition, private loans are not based on need. Therefore, approvals are granted using a person’s credit score, credit history, and personal income information. Private loans also offer fixed interest rates and a shorter repayment period which can be beneficial depending on the borrower’s financial goals.

As the average cost for an education at four-year private schools increase, more students find themselves financially lacking even after they have been awarded state and federal aid. This is because federal loan limits have not increased with inflation. Private Student Loans, however, can help bridge the gap between aid and the cost of higher education, making it possible for students to choose more freely the university they wish to attend. Repayment usually begins six months after graduation, and private student loan consolidation exists which may lower your monthly payments.

For more detailed information on private student loans, visit PrivateStudentLoan.org