With the steady escalation of educational costs and as the number of applicants are on the rise for federal loans, private student loans have grown rapidly among college students. Many students find the private student loans to be fitting and obtained effortlessly for making college education expenses. Private student loans also known as alternative student loans are obtained from private financial organizations, banks, credit unions etc based on the credit worthiness of the applicant for repaying the money without the interference of the government within a short period. Private student loans also are frequently used in the combination with federal student loans, especially when the funds are not sufficient through the federal student loans to cover the full expenses towards education.
Private student loans can be availed of by students with good credit report, or when he is a regular employee or if he is permanent resident of US. To satisfy the these requirements, he can apply with a co-signer who meets the minimum eligibility criteria and avail the private student loan.
Benefits of private student loans:
Private student loans can be obtained at a faster pace, making it easy to get and with great flexibility. The approval process is too quick in the case of private student loans that the funds are got by the student within five business working days after the application. The money, which can be availed of through private student loans, is much higher than the federal and scholarship funds. The private student loans can be availed any time by the student without any need to worry about application filing before closing dates. Many private student loans can be consolidated. These private student loans can be used to purchase a laptop, or towards educational expenses etc. A government student loan however, might be very restrictive in spending the money. There is no government intervention, as it is an agreement between the borrower and the private lender. Thus no need for government paperwork.
Although there are lots of advantages in getting a private student loan, no one can deny the disadvantages it has. Private student loans are only for credit worthy individuals, and mostly a co-borrower has to co-sign the loan document. Mostly the co-borrower is the parent. Also, the private student loans carry a hefty interest rate when compared with government student loans. Interest rates can vary each month, while government student loan interest rates are fixed. It requires applying for the loan several times as the applications are separate for each academic year in the case of private student loans.
Guidelines lenders look in for students creditworthiness:
A good credit history for a minimum of 21 months should be there. The residence should not have been changed at least for one years time. Should be a citizen of US or a permanent resident of US and should have resided for two years in US prior to permanent residentship. Should be able to provide proof of present revenue with an employment in the area where the student is attending school. Should have been in the job for at least 2 years, in case of self-employed should have been conducting business for at least 2 years time.