[?] Subscribe To This Site

Private Loans for College Along with Federal School Loans?

Private loans for college can supplement your federal school loans, but consolidating private student loans, and now even the initial borrowing, is hard to do in this recession cycle.

Credit is tight for student loans, because of the continued poor economy.

Lenders will refuse to lend to borrowers who are more likely to default. This category now includes:

students without cosigners
students who haven't achieved a degree within 4 years
students who go to schools where post-graduate income is not considered high enough to pay their loan bills

There are fewer large lenders to borrow private money from now. In 2007, there were over 60- now only a handful are left.

Sallie Mae, Discover, PNC Bank, Wells Fargo, and Sun Trust are still around.

Bank of America, My Rich Uncle, Astrive, Citi Student Loan Corporation are among those who have suspended their programs.

If your FAFSA shows that you will need private money to borrow, your best move is to fill out one application that can be distributed to the large lenders.

Find College Loans

If you live in New York, try New York State Higher Education's loan marketplace for their new state fixed rate loan.

College loans for students can also be found at your local bank or credit union. Many of these have not been impacted as badly by the credit crunch as the larger commercial banks. During this economic recession, many students are finding their local credit union to be the best private loan lender.

Student loans are not secured loans, therefore most lenders will require cosigners. Student loans without cosigners are only approved in limited circumstances. It will be harder to get loans for schools with higher defaulted student loans rates, too.

Private loans do not necessarily come from traditional lending institutions. Any loans that are not federal school loans can be considered private.

Such as:

University Student Loans

If your FAFSA shows financial need, you may be offered a low-interest loan by your school.

If your FAFSA shows that your EFC is more than will be covered by federal student loans, then you need to ask your financial aid office if they have university loans.

Some institutions are actually substituting college school loans for grant and scholarship aid.

Peer to Peer Loans

These private loans are made by groups of private investors. One advantage of these non-traditional loans is that bad credit college loans can be given.

No cosigner student loans are also made (although interest rates will be higher).

State College Loans

Many states offer their own private college loans. Typically, the interest rates are low compared to banks and many states offer debt forgiveness for student loans that include these loans.

In addition to these options, if you are a homeowner with equity, look into refinancing or a getting a home equity loan. You can compare rates with a company like LendingTree.com or get a loan through your local bank. Using your home to pay for an education may be cheaper than getting private loans for college, because this type of loan is secured (unlike a student loan).

If you need student loan debt help with your private lenders, consult a financial or legal expert.

Perhaps you'd like seeing these pages, now . . .

Federal financial aid form

Reduce college loan debt

Federal Perkins loan