The volume of private school loans has increased dramatically over the last years, and it is expected to surpass federal loan volume by 2025. This is partly due to the increase in the annual and aggregate limits starting with 2008. The other problem was the economic crisis of 2007-2010 that limited the lender access to loans. If the federal student loan programs expand, chances are that we'll witness a new shift from private school loans to federal programs. Yet, without federal loan limits increasing every year, the private student loans growth will remain unhindered.
Make private school loans a second option!
Don't go for private school loans unless you have to! You should first do your best to qualify for grants, work-study and other types of student aid available from the federal government. In order to do that you should file the Free Application For Federal Student Aid or FAFSA. If you are an undergraduate student, you may find better repayment terms and less expensive options with the Federal PLUS loan rather than with private school loans.
Check the fees!
Even if some private school loans look very promising on paper, you should not trust anything that appears too good to be true. Fees often lead to a significant increase of the loan costs. Even if the loan has low interest rates, that won't matter too much if it has high fees. For example, 3% or 4% in fees represents pretty much the same thing as a 1% higher interest rate for the full loan.
Make sure you compare loans correctly!
The Internet now abounds in tools to compare private school loans. The problem nevertheless lies in the fact that you have to compare loans in the same category and with the same repayment terms in order to get an accurate estimate of what lies ahead. Therefore, always make sure that you generate an apples-to-apples comparison between the various private school loans. There are websites that provide the right tools for it.
Get familiar with the terminology!
You can't compare between private school loans and make sense of the results unless you know a thing or two about loans and their specific language. It's confusing and a bit difficult for the beginner, yet an absolute must to make a good loan choice. Find out how loans vary according to the LIBOR index and get familiar with concepts such as the Prime Lending Rate.
Make private school loans a second option!
Don't go for private school loans unless you have to! You should first do your best to qualify for grants, work-study and other types of student aid available from the federal government. In order to do that you should file the Free Application For Federal Student Aid or FAFSA. If you are an undergraduate student, you may find better repayment terms and less expensive options with the Federal PLUS loan rather than with private school loans.
Check the fees!
Even if some private school loans look very promising on paper, you should not trust anything that appears too good to be true. Fees often lead to a significant increase of the loan costs. Even if the loan has low interest rates, that won't matter too much if it has high fees. For example, 3% or 4% in fees represents pretty much the same thing as a 1% higher interest rate for the full loan.
Make sure you compare loans correctly!
The Internet now abounds in tools to compare private school loans. The problem nevertheless lies in the fact that you have to compare loans in the same category and with the same repayment terms in order to get an accurate estimate of what lies ahead. Therefore, always make sure that you generate an apples-to-apples comparison between the various private school loans. There are websites that provide the right tools for it.
Get familiar with the terminology!
You can't compare between private school loans and make sense of the results unless you know a thing or two about loans and their specific language. It's confusing and a bit difficult for the beginner, yet an absolute must to make a good loan choice. Find out how loans vary according to the LIBOR index and get familiar with concepts such as the Prime Lending Rate.
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