College is pricey, which means students are looking for ways to pay for their college education. Student loans are one of many ways to pay for college—but unlike gift aid, loans have to be paid back. A private loan should only be considered after you’ve fully exhausted scholarships, grants, and federal aid programs. Even then, there are questions you should ask your private student loan lender.
What are private loans?
Private loans can be a little more stringent than their federal counterparts, since they’re offered by individual private organizations, such as banks. Federal loans might offer flexible repayment plans whereas private loans tend to be more rigid. It’s always important to do thorough research and planning before making any lasting decisions.
Questions to ask your private student loan lender:
That’s why we’ve compiled this list of important questions to ask your private student loan provider! Make sure you get all of the information you can, so you can make the best, most informed decision possible, and secure a positive financial future for your higher education!
- What is the lowest interest rate you offer?
- Am I eligible for that rate? For private student loans, your interest rate depends on a lot of things, including your credit score and other financial history. You may consider a cosigner in that case.
- If a rate is variable, how often is it adjusted?
- If a rate is fixed, what rate am I eligible for?
- When am I required to start making payments?
- When are my payments due?
- Can I defer my payments while I’m still in college?
- If so, for how long?
- If I defer, how does that affect my payments later on?
- What sort of penalties are associated with this loan?
- What happens if I’m only late on one payment?
- Are any discounts you offer subject to change later on?
- Are there any circumstances in which I’d be allowed to temporarily reduce payment?
- If so, what are they? And for how long?
- How much can I borrow without it affecting my federal aid opportunities?
- What happens if I default?
- What can I do to prevent that?
- Am I eligible for income-based repayment plans?
This is by no means an exhaustive list of questions, but rather a few to get you to start thinking about student loans. Add your own questions to the list and ask away.
File the FAFSA, even if you don’t think you’re eligible for any aid. The FAFSA opens you up to merit-based scholarships and grants, as well as federal student loans. Additionally, take advantage of outside and local scholarships! There are so many scholarships out there that you qualify for. Scholarships are essentially free money, so why not apply to them? Again, and we can’t stress this enough, private student loans should be your last resort when you’re trying to pay for college.
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