College was never meant to be a free ride, and for tens of thousands of students every year, the realities of meeting costs can be crippling. No wonder then that so many turn to private student loans to help pay their fees and cover their living expenses.
Of course, trying to get financing when already with a bad credit rating can be very difficult, but there are two routes available when seeking loans for students. First is the public loan route, and second is the private loan route, and for any student applying for loans, there are some details that are very much worth noting.
Private vs Public
The key difference between private student loans and their public counterpart is the sum limitation that exists. Generally, the public option is limited to around USD20,000 because of the fact that the federal government is putting the cash up. This may be enough to cover partial fees or for full fees at some of the smaller colleges, but loans for students at the lager schools will have to be a lot more.
Meanwhile, the public student loan option is only offered to a certain group, with income qualifications needing to be matched before an applicant can qualify. The exclusive nature of Perkins loans, for example, means for many it can be ruled out as an option from the start, ensuring that students applying for loans are forced look elsewhere.
The private option, however, is far less fussy. The only real criteria that matters is that the loan can be repaid. But given that repayments usually do not begin until after graduation, it is something that can be prepared for over the course of college.
Terms an Rates
It can be confusing to look at the varying interest rates on private student loans, but there are good deals available. Even if bad credit is an issue, there are private lending banks that are happy to approve a loan, though the interest rate will be higher due to the conditions.
While public loans can offer pretty good deals, and in some cases better than private, loans for students are probably best coming from private lenders because of the terms of repayment available.
The fact is that for students applying for a loan, there is a greater flexibility and range offered by private lenders. Public loans, by comparison, usually have very strict terms, locking the student into a commitment to repay the loan in full within 10 years of graduation. But private student loans can be repaid in anything up to 30 years, meaning there is less pressure and more time to get on your feet.
Extra Factors
Of course, college students are not usually very experienced in the way of the financial world, which is why lenders look at some extra factors before agreeing to approve a private student loan. These include the credit history of the parents of the applicant as well as the applicants history.
With this in mind, it is not a bad idea to get a cosigner for the loan application, thereby guaranteeing students applying for a loan have someone who can cover repayments.
In general, loans for students are an excellent solution to meeting college costs, but there are always pitfalls to watch out for. What is important is that the right loan option, for the right sum and at the right interest rate and agreed repayment schedule is secured. Private students loans offer the type of flexibility every student is in need of.
Donna Hammond is the author of this article. For more information about Bad Credit Unsecured Loan and Mortgages for Bad Credit please visit her website at QuickBadCreditLoans.com
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