What You Need to Know about Private Loans


What You Need to Know
A private educational loan requires repayment to the lender. Most private educational loans offer deferment of payment until six months (varies) after graduation or withdrawal from school. During any period of deferment interest is accruing, increasing the amount you will owe on the loan. Private educational loans rarely have death or severe disability cancellation provisions as federal student loans offer.

Before resorting to a private loan you should exhaust all alternatives. Look into the following options.

File a FAFSA
ALWAYS file for federal financial aid by completing the FAFSA. Apply for any available federal loans before private loans. Federal loans may provide better repayment terms and conditions than private loans.

Use Earnings
Use earnings from work to help cover tuition, fees, room, or board changes. Could you cover your room and board with earnings from work? The majority of college students are employed in on or off-campus positions. If you live like a college student while in college, maybe you won't need to live like a college student after graduation.

Can you reduce the educational expenses being incurred (are you living in an expensive apartment, do you need to purchase a computer, etc?) Are you budgeting wisely, spending your money on your needs instead of wants? These questions influence the amount of money that you have available to cover your tuition, fees, room and board. Any amount that you can deduct from a private educational loan will benefit you in the end.

Family Contribution
Are your parents providing financial support for your college costs? The federal government's need analysis formula calculates the Expected Family Contribution (EFC) for each student that files a FAFSA. For dependent students, this EFC is comprised of a student and parent contribution. Sit down with your parents to see if they are able and willing to provide additional funding for your college education.

Payment Plan
Art Center offers a payment plan that can be used to make payments over the course of the semester.
Last modified: Friday, 25 July 2014, 10:50 AM