Applying for Private Education Loans

Private Education Loans are a necessary financing option for some families. College bills typically are sent to the student in July with a due date of August 1st or thereabouts. In order to plan accordingly, families should allow plenty of time to compare private loan programs and finalize financing options. Before committing to borrow a private loan, please make sure the student has maximized federal loan program offerings as well as reviewed payment plan options.

If you determine that a private education loan is necessary, most families should begin applying for private loans ideally by June or July prior to the student’s enrollment. The loan application review process and subsequent processing period can take time, thus it is prudent to begin the process as early as possible. It is also important to compare a variety of private loan programs to make sure you are getting the best possible pricing and loan terms. It is acceptable to rate shop during a specified period of time. If you do need a private education loan, just make sure you carefully determine the true cost of borrowing, also referred to as the Annual Percentage Rate (APR), which takes into consideration the interest rate and any fees associated with the loan.  Shop around for interest rate quotes from a variety of sources and compare loan terms very carefully. Remember that lenders, such as banks, credit unions, state agencies, and private companies have loan programs available. Ask the Financial Aid Office if they have a Preferred Lender List as this can be a valuable guide for families needing to compare alternative loan programs. As a guide, use the private loan comparison points mentioned in another article on this site.

Try to limit borrowing, as reality will set in when loan repayment begins. Before signing loan promissory notes, be sure to read the fine print, understand your monthly repayment obligations, and realize the true cost of the loan.  The original amount that you borrow is the principal loan amount. Interest will be charged on that principal loan amount, so please borrow only what you absolutely need.

If you need to borrow, then REMEMBER that FEDERAL DIRECT STAFFORD LOAN PROGRAM limits should always be maximized first before turning to private education loan programs.

For tips on comparing loan programs and other financing options, check out Financial Aid Sense ~ a VITAL read for anyone needed to finance a college education.

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Jan Marie Combs, EzineArticles Basic Author