Although there are student loans and financial aid available through
the government, those options may not provide enough money for students
to continue their education, especially students who are going into
the medical field. That's why these students may need to consider
private student loans as well.
Private Student Loans
- Options
Besides having access
to additional funds needed for tuition, parents and students often
look to private student loans because they offer more flexibility
than do PLUS
loans and Stafford
loans.
For example, parents may be able to hold off on repayment until
after their son or daughter graduates from college. They may also
have a longer repayment period. For PLUS loans, the repayment period
is only 10 years. For private student loans, the repayment period
can be as long as 25 years.
For example, parents may be able to hold off on repayment until
after their son or daughter graduates from college. They may also
have a longer repayment period. For PLUS loans, the repayment period
is only 10 years. For private student loans, the repayment period
can be as long as 25 years.
Private Student Loans
- Negatives
While there are many
reasons to consider private student loans, they should not be a
student's first option.
For one, students may
have a hard time taking out these loans on their own. Because credit
history is a factor, students with no credit history or who have
families with bad credit history are unlikely to be approved for
most of these loans.
Additionally, these loans end up being more expensive. While fees
through the government student loan programs are usually only around
1% (sometimes there are no fees), private lenders can charge fees
as high as 9% of the total amount of the loan. That means a loan
for $25,000 would incur a fee of $2250 which would be added to the
principle. Interest rates may also be much higher, especially for
borrowers who are considered high-risk.
References and Links
To learn more about
the different private student loans available, students and their
parents may want to visit these private student loan resources:
financial
aid: private loans or the University
of Colorado (Denver) financial aid page.
To find out more about
alternatives to these loans, they could read Stafford
Loans or PLUS
Loans.
