Congratulations on your acceptance to college! One major obstacle is behind you with your acceptance to college, however, now you need to navigate the college financing process and figure out how to pay the college bill. There are a number of resources available to pay the college bill, and several articles on this site are devoted to examining the different options available and offering some tips to help you along the way.
Private education loans, also referred to as alternative loans, are credit based loans offered by lenders, including banks, credit unions, state agencies, and private companies, and are one such option available for paying for college. PLEASE be sure to investigate all financial aid options from the college, outside scholarships sources, and the student loan program entitled the Federal Direct Subsidized Stafford Loan Program before borrowing through a private education loan program.
Since private education loans can be expensive to borrow, before borrowing a private education loan, you should carefully compare the terms, repayment details, and total cost of the loan, including interest rate and fees. Loan terms and repayment details vary greatly amongst lenders and between loan programs, so do be sure to compare loan details carefully and use the questions provided below as a guide.
* Type of Loan? Do you want the student as the primary borrower or the parent as the primary borrower?
* Does the loan require a cosigner?
* Interest Rate? Do you want a fixed rate loan or a variable rate loan?
* Are there any fees for the loan?
* What is the maximum amount that I can borrow through this loan program?
* When does interest begin to accrue on the loan?
* How often is interest capitalized?
* When does repayment begin?
* How long do I have to repay the loan?
* What is the monthly payment amount?
* Can loan repayment be deferred?
* Is there a prepayment penalty if I want to pay the loan back early?
* What if I can’t pay the loan? Are there forbearance provisions?
* How does this loan compare to other financing options?
This long list of questions isn’t meant to be overwhelming, but instead can be used as a resource when comparing loan options in a very complex private loan market. As you compare private loan programs, collect all the date and make a comparison chart so that you can review programs side-by-side and make a careful comparison. Lenders will need to provide you with a disclosure statement up front which will include all of the costs associated with borrowing the loan and the repayment details for the loan.
We updated our practical guide about college financing entitled Financial Aid Sense to give you the tools to sort through the complex financial aid process – pick up a copy today so you are in the know! See what our readers are saying about Financial Aid Sense!