The idea of starting college life can be an exciting proposition for many students. However, along with the excitement comes the challenge of paying for college. This challenge can impact not just the students but their parents as well. Not everyone is financially well-off to cover the entire college expenses of their kids. Even federal student aid and scholarships may not be enough to meet all the expenses in a smooth manner. This is where private student loans can be of great help. Such a loan can turn out to be an effective solution to your financial worries regarding how to overcome college expenses. Check out the main benefits of private student loans:
Higher loan limits
It is a known fact that most federal loans for students are limited and no student can expect to receive financial aid beyond a certain point. However, the federal student aid received by a student may not be enough to pay for the entire college expenses if the college is an expensive one. Under these circumstances, a private student loan can help to bridge the gap between the financial aid you receive and your expenses. In other words, you can get a private loan that is large enough to cover the complete cost of attendance for your college minus any amount you have received as financial aid.
Variety of choices
In case of private student loans, you can expect to find a variety of choices. More often than not, lenders offer both types of interest rate options: fixed as well as variable. A private student loan with fixed rate means the interest rate is fixed at the time of taking the loan and it remains the same throughout the entire duration of the loan. In case of a student loan with a variable rate, the rate of interest can vary in the future depending on certain factors, such as market rates, etc. You can select the type of interest rate depending on what suits you and how you plan to repay the loan. Additionally, some lenders may even offer a reduction in interest rate for automatic payments or good grades. This can be an added advantage for you. Also, different lenders offer different loan plans and terms. You can opt for a plan for repayment that matches your ability to repay the amount without feeling burdened.
Speedy disbursement of funds
The process of applying for private student loans and disbursement of funds usually involves a straightforward procedure that does not require much time. When you are in need of funds immediately and don’t have the time to go through lengthy loan processes, a private loan can be a fine option in such case. You will be able to arrange the funds on time and not miss the opportunity to get admitted into a college of your choice just because of delayed loan disbursement.
Get best interest rate with a cosigner
Many lenders of private student loans allow students to apply with a cosigner. This helps to increase the student’s chance of getting the loan approved. At the same time, the student can expect to qualify for a lower rate of interest if a cosigner comes on board. This is because lenders often depend on credit score and credit history of the cosigner to determine the interest rate for the loan. As a student, you may not have a credit history. But the cosigner is likely to have one and lenders can take that into the count to approve the loan. If your cosigner has a good credit history, you can have the best interest rate for your student loan. Also, you may even make sure that the cosigner will be released from the debt agreement after you repay a number of loan instalments on time and fulfill the other conditions laid out by the lender.
Parents not required to be the primary borrowers
Not all parents want to be the primary borrower for their kid’s student loan. Even if they may have good credit scores, they may not want to take all the responsibility for the loan. On the other hand, some parents may not have a credit history that is good enough to earn a lower interest rate for their kids. Under both the circumstances, the student may opt to go ahead with the loan alone. The student can also decide to make someone else a cosigner for the loan apart from the parents. The bottom line is that the student’s loan prospects won’t be hurt due to any stand the parents may take.