Private student loans, also called an alternative student loan or a private college loan, is a great way to pay for your college education. To save the most money on college over your lifetime, I have outlined a guide for looking for money:

1. Look for Scholarships and Grants
2. Apply for federal financial aid by completing the FAFSA.
a. This is a free U.S. government website, so do beware of sites that want to charge you to apply!
3. Apply for financial aid through your state government
4. Use your federal as well as state grants
b. You will know if you are eligible after you complete the FAFSA and your state’s paperwork
5. Use your savings
6. Use work study money or work a little through school
c. It is easy to get distracted by work so find the right balance for studying
d. A college degree can earn you an additional million dollars over your lifetime, so make sure you do not lose track of your goals!
7. Borrow Federal College Student Loans for students. The most common federal college student loan is the Stafford Loan.
• Graduates college students should also apply for a Grad PLUS Loan
8. Ask your parents to borrow a PLUS Loan for you
9. Private student loans

What is a private student loan?

The federal government does not back a private college student loan, so it is more like a traditional consumer loan through a financial company or bank. There may be less paperwork and it can be faster to apply for and to get your money to your school, but the interest rates and terms on federal college student loans are likely to save you more money over your lifetime. In addition, with a private student loan, you may very well need a co-borrower who is willing to sign for the student loan with you, if you are not working or do not have much experience with credit so you have a limited credit history.

Why a private student loan?

If you need to borrow money, federal college student loans are a great deal. The problem is, with all student loan amounts tied to your year in school, most times they will not let you borrow to cover your cost of attendance. Typically, the undergraduate college student is eligible for:

• $5,500 Freshman
• $6,500 Sophomore
• $7,500 Junior, Senior and 5th year undergraduate students

Therefore, if you are still in need of money for school, this is where a private college student loan can help!

Private student loans will ultimately be a great way to cover your cost of attending college when savings, scholarships and federal financial aid are not enough. When faced with these difficult financial decisions, it is important to weigh all the options. What is going to do the best for you not only now but in the future when you have to start paying all those student loans back? Think hard and make the right financial decision that fits your financial needs.

This entry was posted on Thursday, October 23rd, 2008 at 9:42 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.