Private Loans for Students are not Federally Sponsored
While government funded student loans are some of the most popular financing options for college because of their
low student loan interest rate features, in some cases students may need to access additional funding or find a
private alternative student loans options if they do not qualify for a federal student loan. In these cases,
private loans for students can be quite advantageous. Private student loans are also known as alternative
education loans and are offered by private lenders. Funds are provided directly to the student, rather than routed
through the education institution the student attends. Due to the fact that such loans are not related to the
federal government, prospective borrowers are not required to complete any federal forms such as the FAFSA in order
to apply for the loan. Prospective borrowers will normally be asked to complete the lender’s application form;
however, this can typically be handled in a simple and hassle-free manner on-line. Once approved, students and
families may be able to receive the proceeds of their loan in as little as a week or less. There are several key
advantages to private loans for students:
While these advantages can be very attractive, students and families considering private student loans should
be aware that there are also disadvantages:
- Borrowers may be eligible to receive more funding than is traditionally available through a government
funded student loan.
- Parents can defer repayment until the student has left college (not available with a federal student
- Loans are available for certification programs and specialized training courses that might not participate
in federally funded student loan programs.
- private student loan rates are usually higher with private alternative student loans due to the fact
that the loan is not guaranteed by the federal government.
- Students will not usually be eligible for student loan loan forgiveness programs if they choose to enlist
in the military or participate in Peace Corps or public service.
- Loans approval is based on student or family’s credit rating-may result in rejection or higher interest
- Some lenders may charge application or origination fees.
A private bank student loan will have higher rates, fees and costs associated with the loan with less pay back
flexibility. With good credit or a student loan co-signer on the student loan, rates may be much better.
For more information on the lowest private student loan rate and possibly the best student loan rate
please visit private
student loans for more.
Private Educational Loan
Some families turn to private education loans when the federal loans don't provide enough money or when they need
more flexible repayment options.