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A college education is a priceless tool for the realization of the American dream. Each year, however, millions of Americans cringe at the mere sight of the sticker price, discouraged by the soaring cost of tuition and wondering how they will ever afford it. Ironically, financing a college education has never been easier and more available. With the availability of money in the form of student loans, college applicants no longer need to feel the pinch. Surveys show that more than 70% of college students rely on some type of financial aid.
Private student loans, also known as alternative loans, are typically backed by banks and non-profit organizations instead of the federal government. Private student loans can help with your additional education expenses between federal loans, scholarships, and federal aid. If you are an incoming freshman or a college senior, you are going to run into unexpected expenses such as books, computers and laptops, and private tutors. Private loans are just the answer, so if you're one of those individuals for who paying for college out of pocket is out of the question, the following overview of private student loan options and college planning strategies will get you on your way to the college of your dreams.
LoanTerms:
Loan Type |
Loan Amount |
Annual Limit |
$40,000 |
Aggregate Max |
$130,000 |
Minimum Limit |
$1,500 |
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Eligibility:
Most private loans have their own set of requirements, based on the lender, but here are a few typical characteristics.
- A college student enrolled at least half-time in a degree, technical, or certificate program (Proof of enrollment must be provided)
- Credit requirements:
- Have an acceptable credit score (above average), proof of residence and employment history
- Have evidence of present income
- Are a U.S. citizen or permanent resident or an international student with a capable credit-worthy co-signer that meets the above requirements
If you are not sure of your credit score or if you should apply with a qualified co-signer who meets the above requirements, ask yourself the following questions to determine if you are eligible. Co-signers can bring added benefits, so even if you do meet the conventional credit guidelines, it may be in your best interest to apply with a qualified co-signer.
- Are you a U.S. citizen or permanent resident and have resided in the U.S. for the previous two years?
- Do you have adequate credit history for at least 21 months?
- Do you have proof of current income? (It is mandatory that you sustain employment with the stated employer or in the same industry for the duration of your school career)
- Do you have proof of employment for at least two years?
- Have you resided at your current and immediately preceding addresses for a total of at least 12 months?
Benefits of having with a co-signer:
- Reduced interest rates
- Lower monthly payments
- Improved likelihood of approval
- Less total interest paid on the career of the loan
- Decreased origination fees
Interest Rates:
Interest rates for private loans vary depending on the loan, lender, co-signer and met requirements.
Repayment:
Repayment begins directly after graduation or less than part time enrollment and offers maximum savings over the length of the loan. Principal and interest costs are paid in a fixed monthly payment starting 45 days after funds are disbursed.
Repayment begins after funds are originally disbursed to help reduce overall debt. Small interest payments begin 45 days after payout during your school career. Principal repayment and remaining interest starts 45 days after graduation, withdrawal, or less than part time enrollment.
- Deferred Principal & Interest Repayment
Repayment begins 180 days after graduation, withdrawal, or less than part time enrollment from school. The interest is capitalized quarterly and at the start of repayment.
Browse additional student loan information:
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