| The cost of university education continues to outpace | | | | $30,000 limit. |
| the consumer inflation rate, putting an even greater | | | | - More options: Students can use private student loans |
| burden upon the shoulders of financially squeezed | | | | to pay for a laptop computer and other |
| families. With annual education costs exceeding | | | | education-related expenses. A government student |
| $30,000 or more at some universities, the financial | | | | loan is more restrictive. |
| burden is particularly profound even when some sort | | | | - No government involvement: A private student loan is |
| of assistance is made available. | | | | just that - an agreement between you and a private |
| Government student loans have long been an | | | | lender. No government paperwork is filed because the |
| important way to help students complete their | | | | funding is strictly private. |
| education with private student loans now gaining in | | | | Although a private student loan has certain inherent |
| importance too. Let's take a look at the advantages | | | | advantages, the following disadvantages should be |
| and disadvantages of funding higher education through | | | | considered: |
| private student loans. | | | | - Credit check required: Only creditworthy individuals |
| When it comes to college financing, often the sticker | | | | are eligible for a private student loan. In many cases a |
| price is one thing, but the actual cost of education is | | | | co-borrower (usually the parents) will have to co-sign |
| something different. Depending on the aid offered, | | | | the loan. |
| students can expect to receive anywhere from a full | | | | - Higher interest rate: Private student loans charge a |
| scholarship to not being offered any financial | | | | higher interest rate than government student loans. |
| assistance. In most cases, the cost of education lies | | | | Rates are also variable, which means they can |
| somewhere in the middle once family income, assets, | | | | change up or down each month. Government student |
| and other factors have been taken into account. | | | | loans are fixed rate loans. |
| The amount remaining after financial aid has been | | | | - Multiple applications required: A private student loan |
| factored in is what must be paid to the school, an | | | | must be applied for each academic year. That is also |
| amount that can vary each academic year. This gap is | | | | true for government student loans. |
| what often prompts families to consider financing | | | | Unlike other forms of personal borrowing, a private |
| options, with government-backed student loans being | | | | student loan does not have to be paid back until after |
| one option and private student loans another one. | | | | graduation. Just like a government student loan, grads |
| Private student loans have several advantages to | | | | have a 180 day grace period before the first loan |
| them including: | | | | payment is due. |
| - Quick approval process: In as little as five business | | | | Students should apply for the maximum amount of |
| days, a loan approval can be given with the funds | | | | government student loans available. But when |
| made available directly to the student. With | | | | government student loans do not cover the entire cost |
| government student loans, processing is completed | | | | of education, private student loans are a fast and |
| through the college. | | | | flexible way to finance the remaining cost of higher |
| - More money: Usually, you can borrow more money | | | | education. While a government student loan is an |
| privately than you can receive through government | | | | attractive choice for many, private student loans offer |
| sources. The loan amount is usually capped at $30,000 | | | | a competitive alternative worthy of further exploration. |
| annually or $40,000 when education costs exceed the | | | | |