Education is one of the essential things in this world. There is no doubt as to the advantages that a college education brings to a person’s life. Even though there are scholarships and grants offered by most universities and organization. You may still have to get a private student loan for college.
For most students who do not have the resources to cover the college costs, a private student loan is their next option. WE need to look at a private loan to see how it works, the requirements, and is it worth it.
How does a Private Student Loan Work?
Applying for a private student loan has a different process then if you were applying for a federal student loan. The loans are provided by private institutions such as banks and other lending companies.
You will have a vast pool of lending options once you start with the application process. Going with a private lending source is your last resort when paying for college. It will be the most expensive option.
Private student loans can cover your tuition fees, textbooks, and other school needs. The loan can also cover your off-campus needs such as your rent, dependent care, and transportation allowances.
Once you have chosen a lender, you can start your application process. You must remember that different financial companies have different loan processes and requirements. Most of these institutions now offer online services, making applying easier.
After going through the application process, it is also best that you verify with your chosen lending company your repayment options. Will they expect you to repay the loan while you are still in school, or will they wait until you graduate and land a stable job? Again, it is a good practice that you know the answer to these fundamental questions to avoid possible problems in the future.
How Long Until the Loan is Approved
Private student loans may take 2 to 10 weeks to go to your account or your school’s account after the approval of the application. Most of the time, lending companies disburse the loan proceeds directly to your school. If there is an extra fund from it, you may refer to your school’s policy as to how the excess funds are being handled.
How do you Qualify for a Private Student Loan?
Aside from the documents that are required which you will need during the loan application, there are few things which you need to provide.
Applying for a loan is one thing. Qualifying can be tricky depending on the student loan company.
- You must be enrolled in an accredited school
- Have at least a part-time status in the university or college where you are going
- It is also essential that you can prove that you are a US citizen or an eligible non-citizen
Private student loans are credit-based, which means you need to have a good credit standing to be granted for a student loan. However, since students still have no credit history, a co-signer is necessary for you to be eligible.
With this, lending institutions will have an assurance that if ever you cannot repay your loan on time, someone will take the responsibility of paying it for you.
How much in Private Student Loans can One Get?
The amount of money you can get depends entirely on the lending institution which you have chosen. There are banks or financial institutions that will base your loanable amount to the total cost of your attendance. While others have a yearly loan cap that gives you more freedom to decide how much you need to borrow.
How long does it take to get a private student loan?
It depends on how long it will take for you to complete the requirements. But when it comes to the student loan approval, it can take around 2-10 weeks for your college to receive the funds. It will depend on when your application had been approved.
Can I get a Private Student Loan with Bad Credit?
If you happen to have bad credit and in need of a student loan, don’t worry. You can still apply for a private student loan. However, it will have a higher interest rate compared to federal student loans, but at least you can continue further with your education.
Can I get a Private Student Loan Without a Co-Signer?
It can be more challenging to get approved if you do not have a co-signer. However, both federal and private student loans offer this type of student loan. You must make sure that you have a good credit rating to be allowed to apply without a co-signer.
What is the Best Private Student Loan?
As we said earlier, there are a lot of private financial institutions which offer student loans. It makes the selection process a difficult one. Consider the factors below for you to reach a perfect decision when it comes to choosing where to apply for a private student loan.
Here are the top 5 Student Loan Companies:
Credible will be able to give you the best option for a student loan since they can refer you to eight loan companies at once. That way, you no longer must shop around for rates since the lenders will be searching for you. It will provide you more options before deciding which student loan company and term to apply.
2. Sallie Mae
It is the most popular and the most prominent private student loan company around. Sallie Mae also provides the most flexible term since they can also offer loans for K-12 in case you want to enroll your kids to a private school.
3. College Ave
It only takes three minutes for College Ave to inform you if you’re good to go with for your student loan. They also offer loans for undergrad, graduate and they offer parent loans. It can be a one-stop-shop for a student loan.
4. Citizens Bank
They’ve been around for some time and have a ton of student loan option. They have some of the lowest fees on the market although it can take some time to qualify with a cosigner release. Still, it can provide good payment terms up to 15 years.
5. Common Bond
This company supports non-profit organizations such as Pencils of Promise. They also offer a no application fee as well as pre-payment fees. They provide a program for businesses to help with student loan assistance as an employee benefit.
When can I Apply for Private Student Loans?
If you are planning to go to college, it is best to apply in advance to avoid any unforeseen issues that may arise. Since most private student loan companies are open throughout the year, you can start looking for your options and decide which one you will apply. That way, you can have ample time to be ready when you must pay the tuition fee from your college you are going to.
Steps to take to apply for a private student loan:
Find a student loan company that can provide you more flexibility. An excellent private student loan institution offers you a flexible loan and repayment terms. It allows you to apply for a student loan for your kids who are in K-12 and are in private school and even to graduate students.
A lot of students also appreciate the accessibility that a lending company offers. An online presence is significant as it provides a convenient way for students to apply anywhere, anytime. It will also help you compare which company will suit your needs.
3. Ease of Application
Aside from the option to apply online, an ideal student loan provider also takes only a few minutes of the applicant’s time to apply. There are lending institutions out there which takes only 15 minutes for their overall loan application.
4. Cosigner Release Option
To take advantage of this feature, you need to ensure that you will be making timely repayments and remain in good standing with the student loan private company. It allows you to unburden yourself from worries and to take responsibility for your obligation. Most companies offer this option. It is best to take advantage of this feature.
How do college loans work is another post that can help you navigate the loan process.
There is a wide array of choices one has when it comes to private student loans. If you really want to get a college degree you will find a way to pay for college tuition. Once you get the loan then you are obligated to repay it according to what is agreed.
Private student loans may differ from the federal loan in some ways, but they still share the same principle. That is to aid you in your college financial needs. Thus, it is only imperative that you do your part and study well. That way, once you graduated with flying colors, you can start the life you were dreaming of to become.