College education in the U.S. is expensive and involves a lot more beyond tuition fee. While federal loans can help with the basic education cost, they can’t take care of the several other expenses related to college education.
That is why student loans by private lenders have gained popularity in the last 10 years. A private loan can help cover the education-related costs not covered by your federal loan and any scholarship—which can add up to a significant amount made up of books and supplies, room, boarding, special fees such as event-related fees, transportation, and more.
Financing your higher education is perhaps the most stressful part about college. A careful comparison of the available options is important to make an informed decision, as this decision will impact your life for a long time to come.
When researching for a student loan, it’s important to read the fine print with regard to payment terms and interest rates as well as any other special terms. As most students today prefer online research to visiting individual lenders, exploring an online marketplace that offers loans from multiple lenders might be a good idea. Having several options to choose from and compare will give you an edge and protect you from getting a bad deal that favors the lender more than it favors you.
So here’s a rundown on how to apply for and secure a private student loan to meet those additional living costs.
Calculate How Much You’ll Need
Before you begin looking out for a student loan, it’s important to know the estimated overall cost of attending university. The uni’s website is a good place to begin to know all of the additional charges you’ll have to pay aside from tuition. If relocating to another city, you might want to get in touch with students already living in the city to know what it takes to get around town (think online student forums and alumni forums).
Use an online loan calculator to know the exact loan amount needed to cover your cost of attendance. Once you know how much you’ll need each year, deduct the federal loan and any education aid from this sum to arrive at the private loan you need to secure.
In case there are other means to secure a part of this sum—the income you expect to earn during college, for instance—subtract that tentative amount from the loan amount as well. Be reasonable, however. You don’t want to be facing a cash crunch midway through your hard-earned college education.
Compare Federal PLUS with Private Student Loan
If they’re eligible and willing, your parents can apply for a Federal PLUS loan to meet your additional education costs; however, getting a PLUS loan depends on a few factors, including your parents’ credit score, and there is a limit to how much you can borrow. Also, you must compare the interest rate and loan terms of a PLUS loan with a private student loan. The private lending space has grown extremely competitive and some great deals are always on offer with one lender or other.
So do a thorough comparison before taking a decision.
Use an online student loans marketplace to conveniently compare loan offers in terms of interest rates, processing fees, loan term, annual loan limits, repayment terms, etc. Your credit history, and that of your cosigner (most loans will require one) have an impact on the deal you get.
Interest rates of education loans can vary based on the borrower’s credit history. Remember that having a cosigner (parent, friend, or colleague) who has a good credit score can help you get a better deal in terms of interest rate and other terms. Also consider if it would be better for you to opt for fixed or variable interest rate. While federal student loans have a fixed interest rate, private loans have both options. Keep in mind that a variable rate that may be low right now can go up considerably during you’re the life of your loan.
Lastly, check if the lender imposes any penalties for early repayment; you should not have to pay any extra fees just because you want to pay off your loan sooner than you expected.
Education loans help students cover the complete cost of undergrad and grad schools at competitive interest rates and repayment plans that suit every higher education need.
So keep these three key points in mind when doing your student loan research and we’re sure you’ll land a deal that will serve all your education needs.