Private Student Loan Options

 

Popular Student Loans:

Sallie Mae Loans & More

 

Some of the more common loans are the Signature Student Loan by Sallie Mae which is the most popular student loan after the federally funded Stafford loan, Wells Fargo Collegiate Loan, and the privately funded PLUS loan which allows for the borrower to defer payments until after graduation unlike the federal PLUS loan, though the private PLUS loan is never subsidize. 

Sallie Mae’s Signature Student Loan has eligibility just like that of a federal loan requiring the student be enrolled at least half time, be a U.S. citizen or have a U.S. citizen act as co-signer, and the student must have no previously defaulted loans.  The Sallie Mae Signature Loan is a school-channel loan so the student’s school of choice must certify the amount that the student is requesting, and Sallie Mae encourages students to fill out the FAFSA and seek federal assistance and scholarships before applying for their loan. 

Actually, to apply to receive the Signature Student Loan a student must first complete the FAFSA and obtain the financial aid award letter that contains financial information from the school.  Like federal loans, Signature Student Loans offer the benefits of having no payments while in school and a grace period of 6 months after graduation, as well as flexible repayment options and a 30 year repayment term. 

This type of loan offers numerous benefits to an undergraduate student, butthis loan is unfortunately not offered to graduate students.

Private Student Loan Big Lenders

 

Private Loans can come from all sorts of sources.  But as could be guessed, there are some bigger players in private student loans than others.  Sallie Mae, with its Signature Loans, is at the forefront of the private student loan sector.  However, large financial institutions are also major sources, such as:

• Wellsfargo
• Wachovia
• Citibank
• Chase
• Sun Trust
• Bank of America
• Discover

There are also specialized lending groups who have tailored their lending practices specifically to graduate and undergraduate loans.  The better known among these include Sallie Mae, Nellie Mae, Astrive Student Loans, and MyRichUncle.  It is highly suggested that great care is taken when deciding on a private student loan because the terms and options can vary so greatly. 

 

Private Education Loans – Looking at the Terms

 

A more in depth look beyond simply the interest rate is needed in order to factor in everything that affects the long term cost of the loan.  Unlike federal loans, private student loans don’t offer subsidized consolidation of loans as a repayment option, though many of the other methods of repayment are available. 

Seeing the need for this repayment option, there are now private loan consolidation programs that a student can look into utilizing.

 

When You Should Consider Taking Out Private Education Loans?

 

As the average cost of college balloons to more than $6,000 a year the use of private loans has grown as well.  The ease of obtaining a private student loan has helped the private student loan volume increase by approximately 25% a year.  However, it is highly suggested that students attempt to first attempt to obtain federal student loans prior to private student loans. 

The primary reason for this being that, like scholarships, private student loans reduce the amount of financial need, or need-based aid, required to cover the cost of attendance.  This means the borrower is more limited on the amount of federal loan assistance they are eligible for receiving.  A direct-to-consumer private loan can bypass this problem as it is not required to inform the school of the loan therefore isn’t factored into federal loan calculations. 

However, this could soon be changing as there is legislation currently pending that would require lenders to inform a college about all private student loans.