Are Uncertified Student Loans Bad? 

Uncertified student loans means that the money you borrow is independent of how much your college costs

Flickr user Ryan Abel

There are pros and cons to taking any type of private student loans, and uncertified student loans are no different. Before you apply for an uncertified student loan, it is important to explore all of your options so you can make the right choice depending on your unique circumstances.

But First, What Is An Uncertified Student Loan?

In this loan model, you will deal directly with the private lender and the amount you can borrow is independent of the cost of your education.

This is different from certified student loans where the lender finds out the cost of your education from the school and sends the funds directly to your college.

Pros and Cons of Uncertified Student Loans

Taking an uncertified loan is useful for students who have reached their limits with federal loans and need the additional funds to pay for non-tuition expenses such as text books, room, board and transportation.

With this type of loan, you are not required to get your school’s approval on the amount you borrow. You have more freedom to decide how much to borrow and what to put the money towards.

However, uncertified student loans typically carry a higher rate of interest.

So Should You Take An Uncertified Student Loan?

If you have reached your limit with all other borrowing options, then uncertified student loans offer you a way to get the additional funds you need to cover your costs. The important thing is to borrow only what you need and nothing more. It is equally important to try and pay off these funds at the earliest to reduce the total interest accrued.

So no, uncertified student loans aren’t inherently bad, but they shouldn’t be your very first choice—especially if you’re someone who wants / needs more structure in your financial planning.

College Raptor Staff

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