If you’re a graduate student or considering higher education, you may be looking for ways to pay for school. You could apply for a federal student loan or other financial aid. But if that doesn’t work out and you still need money, private lenders may be able to help with your funding needs. While borrowing privately may seem complicated, there are several advantages of working with a private lender over receiving federal loans.
Private Loans
You can get a private student loan from a bank, credit union, online lender, or state agency to pay for your undergraduate or graduate education. Depending on your loan type, the interest rate on your private graduate student loans may be lower than that charged by federal loan programs. This can save you money and give you more funds to cover living expenses while attending school.
Not All Private Lenders Are the Same
Private student loan providers are all different. Each lender has different rates, fees, and repayment options that may or may not be available to you. Some have higher interest rates than others, some offer flexible repayment options, and others provide more loan options. Be sure to read the fine print carefully before choosing a private student loan provider because these can significantly affect how much money you end up paying back each month.
Flexible Repayment Options
Private student loan providers offer repayment options, including fixed, variable, and graduated repayment plans. These options give you more flexibility than federal loans. For instance, if you have a variable rate private student loan and your financial situation changes due to unemployment or other factors, such as having children or a medical emergency, you can switch to another type of repayment plan, such as extended or income-based payments.
Interest Rates
Interest rates may be fixed or variable, depending on the lender. If you choose a private student loan with a fixed interest rate, you’ll know exactly what your monthly payment will be and that it won’t change. If you have a variable rate, the amount you pay in interest each month may vary depending on the state of the market. Consider your goals for this loan and how long it will take to pay it off. If you plan on making payments quickly and predict profitable markets in the coming months or years, a variable rate may be better for you. A fixed-rate will be best if you’d prefer to stick to a consistent budget.
Non-Cosigned Loan Options
While many private lenders require borrowers to have a high credit score and a cosigner before approval, other lenders will issue loans without a cosigner or high credit. Ascent is a private loan provider that understands it can be challenging for high school and college level students to build credit, and many students out there are pursuing higher education without any support. These students need loan options that won’t bankrupt them and will allow them to pursue their goals. Ascent offers outcomes-based loans that consider other factors like GPA, school of attendance, etc. If you don’t have a cosigner to help you get a loan, consider the options available with Ascent.
Be Careful When Selecting Your Lender
Borrowing more than you need or can afford to repay is not wise. Be careful when selecting your lender, and borrow only what you need.
- Do your homework before choosing a private student loan provider. The Federal Student Aid website has an extensive list of lenders eligible for federal loans and grants. Their websites should be checked for information on how to apply for these programs online.
- Review your credit history to know where it stands before applying for a private loan since this will affect the interest rate and terms offered by the lender.
- Apply only when all other options have been exhausted (such as scholarships, grants, work-study) or if the student’s financial situation requires immediate help.
There are Many Reasons to Consider a Private Loan
The best graduate student loan for you will depend on the benefits and drawbacks of each lender. Private lenders usually have fewer restrictions than federal government loans but typically have higher interest rates and fees. It would be best if you compared the benefits and drawbacks of each option before choosing a lender.
Overall, the best graduate student loan is the one that meets your financial needs and goals. If a private student loan could be right for you, get started by researching lenders and comparing offers. It’s important to know what types of loans are available and how they work, so make sure you know what you’re getting into before applying.
