Private Student Loans

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

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.

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