Funding for college education is perhaps the major concern for most of the students and their parents. There are numerous loan options available for the students who desire to opt for higher studies. Most people will recommend a federal student loan or college grants to accumulate funds for studies. The truth is, federal loans, grants and scholarships are unavailable for many as the qualification criteria is quite high. In such a circumstance, private student loans may help you to support higher education financially.
What you must check out before taking out a private student loan?
It’s important for you to select the most reasonable private student loan private student loan to avoid further loan related problems. To find out the most reasonable student loan you need to understand first the application requirements, interest rate, the probable repayment options and the specifications for the cosigner. Not only a student but the parents who’re planning to cosign for their children must also underst. So, here are some information that every student and parent must look for in a private student loan before proceeding with the application:
1. The range of amount that can be borrowed: Many lenders offer a wide range for borrowing money. You can start with as little as $2000 to nearly $2,00,000. You may borrow according to the cost of attendance as per every year. It’s better to borrow less for undergraduates. For graduation, you may have to borrow some more. Borrowing up to $1,60,000 may help you to manage your studies for graduation efficiently. Of course, if you’re planning to enroll into a more expensive course, then you may have to borrow more. Borrow according to your need to simplify the loan payments.
2. The interest rate: Private student loans are infamous for charging very high interest rate but the reality isn’t that harsh either. All the private student loans don’t come up with high interest rates. Of course you must opt for a student loan with the interest rate of LIBOR + 2.0%. A loan with PRIME - 0.50% without any fees will be even better. Also, check out whether the interest rate you’ll pay is tax deductible or not. You may get to save up to $2500 every year through tax deduction on interest rates. Of course you and your cosigner must have a strong credit history to get the benefit of best interest rate.
3. Things required for the application: For every private student you need a cosigner. Anyone with a good credit history and stout financial background may cosign for you. While applying for the loan you’ll have to provide some essential documents including information about your cosigner. Any identification proof like passport, driving license or any government issued ID card is required. The cosigner has to provide his or her recent pay stubs as income proof and copy of credit report.
4. Evaluate the repayment options too: You must keep planning for the repayment from the very beginning. So, before taking out a loan you must decide which repayment option you’ll follow and how much you’ll pay. There are various options for repayment like student loan debt consolidation and consolidation loans. You must decide which option will suit you the best. Talk to the lenders and find out whether they are eager to cooperate for the repayment or not. Pre-planning will help you to deal with your student loan easily.
It’s not that difficult to get a private student loan get a private student loan. All you need to do is to understand your options well and apply accordingly. This will help you to manage your cost of education efficiently along with loan payments.