There are private student loans for undergraduates, graduates, students pursuing certificates, dental, medical, and health professions students, as well as loans for graduates studying for the bar exam, or relocating for medical or dental residencies. There are also parent loans, taken out by a parent, relative, or another creditworthy individual (not the student) that can help you pay for college.[ITM image=”https://lotosun.com/wp-content/uploads/2018/04/camp1.png” video=”25809447″]
Private student loans are issued by a bank or financial institution, (as opposed to federal student loans, which are offered by the government).
What a private student loan can be used for
Private student loans—as well as federal student loans—should be used to pay for your education expenses:
- Room and board
- Supplies and equipment
- Computers and electronics for school
- Personal needs at school
Don’t borrow more than you need. Your federal or private student loans shouldn’t be used for vacations, entertainment, or items that aren’t directly needed for your education. Only borrow what you can afford to pay back later.
Eligibility for private student loans
Federal and private student loans use different eligibility criteria.
- For Subsidized Loans, the US Department of Education pays the interest while the student is in school at least half time, grace (if offered) and authorized deferment periods.
- For Unsubsidized Loans, the borrower is responsible for paying interest during the in-school or grace periods, or a post-school deferment.
Private student loans, offered by banks and financial institutions, are based on your credit profile. Your credit—and your cosigner’s credit—are evaluated, along with other information provided on your application.
Federal student loans usually have lower interest rates than private student loans and can offer different benefits. You should generally consider them first, and then take out a private student loan if you still need money for college.