A private student loan is considered to be the principal alternative to a federal student loan. Rising college tuition costs have meant that most students have little alternative but to turn to an external source to finance their education. Provided that the borrower has a good credit history or a willing cosigner with good credit, the applicant has an excellent chance of receiving approval for a student bank loan. Whilst there are a number of benefits to borrowing money via this method, consider them as a way of paying for additional educational costs that aren’t covered by the federal alternative.
Private Student Loans – Banks Still Prepared to Meet College Tuition Costs
Although the lending criteria have been tightened, student bank loans are still regularly granted. Lenders are keen to establish a working relationship with students at an early stage as they are likely to continue that relationship in the future. Whilst the student loan default rate has grown since the graduate job market declined, it is not possible for most people to write-off student loan debt by filing for bankruptcy. This gives the lender greater certainty that they will get their money back.
Student Bank Loans – Financial Difficulties, Forbearance and Student Loan Deferment
Finding work after graduation or later on in their career can present a genuine challenge for any graduate. Provided that the loan hasn’t been defaulted on, it may be possible to benefit from deferring a student loan for up to 3 years. Although interest continues to accrue, repayments can be delayed until the borrower finds work or overcomes their money problems. Forbearance works in a similar way, although a fresh application will need to be made every 12 months.
Student Loan Debt Consolidation – Private Student Loan Vs Federal Student Loan
One of the problems associated with the federal student loan is that each year requires a separate application, creates a new account and results in the need for a completely separate payment. A student bank loan can be used for the purpose of consolidating all sources of college finance. This means that the borrower will make a single repayment each month for a defined term.
Private Student Loans – Higher Borrowing Limits Than Federal Student Loan
A student bank loan means that it is possible to borrow more to cover college tuition costs and living expenses. The most plausible strategy is to treat federal student loans as the primary method of borrowing and top-up additional financial needs from the private sector. Consider them to be a method of supplementation rather than a viable replacement, especially if qualifying for a subsidized deal. Similarly, student loan debt consolidation is most appropriate for tidying up smaller private loans.