While you should exercise caution borrowing any money, funding your college education with private loans can be an investment in your future.
These funds can fill the gaps where federal loans may not provide coverage, and can help you afford:
- The full cost of your education (minus any financial aid you’ve received)
- Required items such as textbooks, a laptop, and lab supplies
- School activities
But before you can cover these costs, you need to know where to get private student loans.
Consider the Cost of Your Education
The first step is to figure out how much you’ll need to borrow. The full cost of your education can vary widely from a few thousand to tens of thousands of dollars per semester, depending on your school.
Your degree and career choice also influence your educational costs. For instance, you’ll spend more years getting your M.D. to be a neurologist than you will getting your B.A. in physics.
Additionally, consider that graduate programs often come with extra expenses. As of 2021, 46.7% of federal student loan debt belongs to graduate student borrowers.
Know Your Options
Not all private student loans are made equal. Based on your situation, they may have varying requirements.
For example, many private lenders consider your credit score and income when deciding your loan amount and interest rate. But if you’re in college, you may have little to no income, which could lead to a higher interest rate. Depending on your credit history, you may also need a cosigner to qualify for a loan.
You’ll also want to decide whether a fixed or variable interest rate is better for your situation. Fixed interest loans charge one rate for the life of the loan, though initially it may seem more expensive than the alternative. On the other hand, variable rates may come with lower initial rates, but fluctuate based on the market.
How to Find Private Student Loans
After you know what you’re looking for, it’s time to find out where to get private student loans that meet your needs.
Start with Your School
The first step is to start with your school’s financial aid office, which may provide you with a list of approved lenders. You might also ask about recommendations for private lenders based on your educational needs.
Do Your Own Research
Once you have a few lenders in mind, be sure to check that they work with your school of choice, as some lenders require you to attend a Title IV school (schools that process federal student aid).
Also consider whether a private lender offers borrower protections, such as deferment, forbearance, or various repayment options. Can you defer payments? How long is the loan term? What will your total obligation be (principal plus interest)?
Now, it’s time to compare your lending prospects. Start by examining their:
- Credibility and reputation
- Interest rates
- Repayment terms
- Fees, such as origination fees
After you’ve made your decision, it’s time to start the online application process. You’ll likely need to provide your school cost information.
Your lender will also look at your credit score (or your cosigner’s credit score) and possibly your debt-to-income ratio to determine your eligible loan amount and interest rates.
Accept the Loan(s) that Work Best for You
Now, all that’s left is to accept your loan proposal(s)! One of the major benefits of a private student loan is that you are able to apply for loans from multiple lenders, which provides yet another chance to compare your options and select the best loan for your needs and your budget.
Do You Know Where to Get Private Student Loans?
Looking for private student loans to help finance your education? Get in touch with Smartborrowing, powered by Cognition Financial which provides the Custom Choice Loan® and Union Federal® Private Student Loan programs.Contact Us