Whether you are preparing to launch your academic career or looking to further your education with a graduate program, it’s important to get your finances in order as soon as possible. Tuition, books, and other supplies can add up quickly — and you don’t want to fall behind.
If you don’t have the savings to fully pay for these expenses, you may want to consider taking out a student loan. A student loan lets you borrow money from the government or a private lender to pay for your school expenses, but it will have to be repaid over time with interest.
To learn more about student loans and how they work, consult an online market. You can compare lenders to find the different rates, terms and offers currently available.
Generally, you will first want to check if you are eligible for a federal student loan through the United States Department of Education. These government loans offer several benefits such as fixed interest rates, flexible payment plans, and eligibility for loan forgiveness. You don’t have to have a good credit score or a co-signer. To see if you qualify for federal financial assistance, complete a Free Application for Federal Student Aid (FAFSA).
For those who aren’t approved for a federal student loan or haven’t received enough financial aid to cover all of their school-related expenses, don’t worry. You can always go the private lender route. Here’s what you need to know about private student loans.
How to get a private student loan approved
A private student loan is offered by a school, bank, credit union, or other financial institution or agency. Unlike federal student loans, interest rates on private student loans can fluctuate. Private student loans can have fixed or variable rates – it depends on your type of loan and your lender.
This is why it is important to shop around for student lenders. You’ll want to look at each lender’s terms and conditions and the rates they offer.
To qualify for a private student loan, it is important to have the following:
- Proof that you are 18 or older and a U.S. citizen
- Proof that you have a high school diploma or GED
- Proof that you are enrolled in a college or university
- Proof from your school’s financial aid office that you need additional help (usually these offices have a form they can share with the lender)
- Proof that you meet all income requirements
Good or excellent credit (if you don’t have a good credit score, make sure you have a ready co-signer).
The National Credit Counseling Foundation provides more details on everything you will need to get approved for a private student loan. However, if you are confident that you can tick all the boxes above, you have a good chance of receiving a loan.
How to Apply for a Private Student Loan
When it comes to getting ready to get a private student loan, the application process is the easy part. In fact, many online marketplaces will guide you step by step through the process.
You just need to know the following information to apply for a student loan:
- Personal information: Be prepared to include your name, address, date of birth, phone number, email address and more (have your license and social security card handy just in case!)
- Tax forms: Make sure you have access to recent tax return documents
- Proof of income, employment and savings: Have your recent W-2 form and other work-related documents — like paychecks — handy (if you don’t have a W-2, make sure your co-signer has one); you should also be prepared to share bank statements
- List of potential schools: Be prepared to share the list of schools (up to 10) to which you wish to send your FAFSA form; be sure to check out each school’s list of preferred lenders
- Credit score: You need to know your credit score and background as most private lenders require a credit check.
If you don’t know what credit score range you are in, there are several resources you can use. Just answer a few simple questions and get your credit score fast.
Once you submit all of these documents, the lender will tell you when to expect approval or denial (some may even tell you within minutes). The time frame varies by lender.
Federal vs Private Loans: What’s the Difference?
The two most common types of student loans are federal and private. Before deciding to choose one or the other, you should make sure you understand the differences between the two.
Generally, federal loans offer more benefits than private loans, but a private student loan also has some advantages, especially for those who are not eligible for aid.
Here are some key points to remember between the two types of loans, depending on the Federal Student Aid office of the United States Department of Education.
- Interest rate: Interest rates are fixed
- Credit history: They do not require a credit check
- Loan forgiveness: You may be eligible for loan forgivenessaccording to your situation
- Payment Plans: You have flexibility and can change your repayment plan after getting the loan; some federal loans also offer income-based repayment plans
- Borrowing limit: It depends on what you qualify for; this is determined by the FAFSA
- Interest rate: They can have variable or fixed rates
- Credit history: A credit check is usually required; those without established credit will likely need a co-signer
- Loan forgiveness: You are not eligible for student loan forgiveness
- Payment Plans: It depends on the lender, some may offer flexible options, but others require payments while the student is still in school
- Borrowing limit: It varies by lender
If you have good or excellent credit, you may be eligible for lower interest rates and better offers from a private lender.
“Private lenders may allow you to borrow larger amounts, depending on your needs and credit history. If you shop around and can show your ability to repay, you may be able to find lower interest rates. compared to certain federal loans,” Consumer Financial Protection said. desk explains on his websitealthough he notes that you should always complete a FAFSA or research other payment plans your school may offer first.