Private student loans can be an excellent way to fund your education. They have a higher interest rate compared to federal student loans, and they don’t have many of the repayment options that federal student loans do. But if you know what to look for, private student loans can be a valuable asset in paying for your education.
What Are Private Student Loans?
Private student loans aren’t the same as federal student loans. They’re not government-backed, they’re not guaranteed by the government, and they can charge higher interest rates than federal student loans. However, these loans are a good choice if your purpose is student loan refinance, especially if you can secure one with a considerably lower interest rate. In fact, according to professionals at SoFi, “refinancing is a great solution for working graduates who have high-interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans.”
So, do you get your private student loan from a bank or credit union? It may be a good idea to shop around before committing to one lender. Different lenders have different lending requirements and fees, so it pays to compare them before taking out a loan.
Who Pays Back Private Student Loans?
With a private student loan, you are the one responsible for paying back the loan. You will pay interest on it and also have to make payments on the principal balance. The lender may require that you make a minimum monthly payment, or they may allow you to schedule your own monthly payments based on your income and expenses.
How Do You Qualify?
- You need a cosigner to qualify for private student loans. A co-signer is an adult who agrees to make regular payments on your behalf, even if you cannot pay them yourself. This can be a family member or friend, but it’s best if it’s someone with good credit and a stable income. If you don’t have such a person in your life, you may want to consider getting a cosigner instead of trying for private student loans on your own.
- Your credit score should certainly be high enough for lenders to trust that you’ll repay the loan. Most lenders expect applicants to have at least fair credit scores of 620 or higher before they consider lending them money; some lenders will require higher scores than this if they see any red flags in the applicant’s history of paying off other debts like mortgages or auto loans in the past 12 months.*
How to Apply For Private Student Loans
If you’re interested in applying for a private student loan, there are several options. You can apply online, by mail or fax, over the phone, or even in person at a local branch. If you’re trying to obtain a loan for multiple students at one time—like your entire family—you’ll want to contact customer service and ask about their bulk application services.
If you need further information about how to apply for a private student loan (or any other type of student loan), be sure to check out our blog post on How To Get A Student Loan For Your Education!
In this article, we’ve reviewed some of the most important factors you need to consider when applying for a private student loan. We hope that by reading this guide and understanding how lenders make decisions about approving or rejecting applications, you can make the best decision possible when applying for funds.
