How to Apply for a Private Student Loan

>> Sunday, February 6, 2011

Costs of higher education have greatly increased in recent years, and a college degree is now more important than ever as a path to financial stability. Since the majority of prospective students cannot afford to pay for college out-of-pocket, they are turning towards various forms of student aid to cover the expenses. When formulating a plan of paying for college, it is important to investigate all possible avenues for financial aid. While scholarships and grants can greatly help with the bulk of tuition and fees, college applicants should not rule out different types of private loans as well.

The process of obtaining a school loan from a private agency is somewhat different than applying for federal student aid, and eligibility is based on a few additional factors. There are also differences in interest rates and the total amount that can be borrowed. Eligibility is based primarily on an applicant's credit history. Most banks and other lending agencies offering private student loans strongly encourage borrowers to have a co-signer if at all possible.
The first recommended step towards paying for college with private loans is to evaluate current financial circumstances and educational goals to get a realistic picture of future ability to repay the money. Prospective borrowers should consider the type of degree field they are entering and the health of the job market for this type of field. While many loans include payment deferment and grace periods after graduation, it is important to be able to relatively easily secure a position with a paycheck that will allow for budgeting payments on a school loan.
College-bound students may be eligible to apply for a private loan on their own, provided they meet certain criteria. Before filling out any private loan applications, gather any available documentation of income. This can include pay stubs or tax returns. It is also a good idea to request a copy of a current credit report. In addition, school loan applications usually require documented proof of college acceptance and/or enrollment.
Before deciding on a specific private loan, compare several different options from different lenders and carefully read through their terms and conditions. All of this information should be easily accessible through lenders' websites. When filling out a school loan application, most lending institutions now offer the options to do so either online or in person.

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