3 Tips When Applying for Private Student Loans

Funding a college education is starting to become as complex as going to school for a bachelor's degree. With tuition increasing each year, you may have to get creative with finding additional finance options for your education. Schools can only supply you with so many federal grants and scholarships, so you may need to take out a private loan. Here are a few ways to apply for private student loans:

Look into additional federal options
Before you head into your local bank and start your application process, try to exhaust all of your federal options. Many federal loans have fixed interest rates and flexible repayment plans, so it can be easier on your finances if you go this route. Ring up your school's financial aid office and ask them if they have any other financial alternatives you can apply for. Some of these may include grants, scholarships from a specific department or even a work study program. Working a few hours in the library each week can help pay for your education and can contribute in assisting you to avoid acquiring additional debt. If you are going to go this route, you will need to file an Free Application for Federal Student Aid in order to be qualified.

Apply with a co-signer
Getting a private student loan is a major financial investment and it can be tough if you do not have any credit to your name. If you are in this situation or if your credit score isn't at the level you want it, you may have to get your private loan co-signed. This is very common for those entering college, as many parents co-sign the loans for their children. Having a co-signer gives lenders reassurance loans will be repaid in a prompt and orderly fashion.

Know what you are getting in to
As you are discussing the private loan with a lender, ask what the loan amount will be, interest rate and repayment plan. The Higher Education Opportunity Act of 2008 says that a lender must disclose this information at the time of filling out the application and before the disbursement of the loan. By understanding the different facets of this loan, you will be able to plan out your finances accordingly and make sure you can afford to repay it back in the future.