Going the Private/Alternative Loan Route: If you don’t qualify for a federal loan, your next option is to seek a private loan. If possible, find one sponsored by a nonprofit organization. You can also shop for a student loan from a bank, credit union or savings and loan. Your ability to qualify for a private loan will depend on your credit history. You may be able to obtain a better loan rate if you apply with a creditworthy co-signer.
Choosing a Lender: Pick a student loan lender that is trustworthy and will deliver on its promises. Don’t succumb to the first direct mail offer that comes your way. Research several lending options. Ask each prospective lender detailed questions about the loan application process; the time period for approval; how your private information will be protected; if it offers benefits for borrowers who pay on time; repayment options; and, how to reach customer service staff. Keep detailed notes as you comparison-shop.
Be leery of any lender who conducts business by telephone only and won’t provide an address.
Compare Loan Products: Search for the loan with the best terms. The lower the interest rate, the less money you have to repay. Remember that adjustable interest rates can go up or down, depending on the state of the economy. Ask about the term (length) of the loan; origination fees (including method of calculation); type of interest rate; caps on interest; available repayment options; prepayment penalties; co-signer requirements; and any other conditions or fees.
Before You Sign the Paperwork: You will be legally responsible for repaying your student loans. Make certain you do not take on an unnecessary or unreasonable debt load.
Before you sign that promissory note, ask yourself these crucial questions. Your answer to each should be a confident “yes”!
- Is this loan really necessary? Have I explored all other options (scholarships, grants, family contributions, part-time jobs, etc.) for funding my education?
- Am I borrowing the minimum amount (not the maximum) necessary to earn my degree?
- Will my loan payments, which begin with my first job out of college, be reasonable on a starting salary?
- Have I shopped for the best loan rates and terms?
- Am I confident that my lender is reputable and will honor its promises?
If Need Be, Consult an Expert: One sign of maturity is knowing when to ask for help. If you become overwhelmed trying to line up funding for your education, or need help with debt management, some nonprofit organizations that can help. Contact Clearpoint Credit Counseling Solutions. A trained credit counselor will work with you to put together a budget and a plan to finance your higher education.