If you are considering options to federal aid for funding your education, one of them is likely to be private student loans . This option provides an additional source of funding for those who are looking for a supplement to federal aid and will enable them to hire their dreams of higher education.
Private student loans have their own advantages. To illustrate, applicants can get loans for more than $ 20,000 and this usually takes only a few minutes to approve. Another good point, unlike federal aid, is that there are no application deadlines. This means anyone can apply at any time by simply approaching one of the accredited education institution. Furthermore, private aid is awarded on creditworthiness. and not on need-based criteria.
Typically, the interest rate of student loans are fixed and borrowers need not worry about fluctuating rates that would increase the interest payments. Besides this, private college loans offer affordable repayment options comparable to federal student loans.
However, there is a difference between the repayment period for private and federal student loan . The maximum repayment terms for a private loan is currently fixed at 15 years, which is much less than the 30 years limit for federal student aid.
On the other hand, private student loan holders forego other vital benefits given by federal loan. To illustrate, if a federal student loan holder becomes disabled or deceased, the loans are forgiven making repayment unnecessary. Private loan holders' heirs would have to repay the loans in full from the refused's estate. Even the disabled and unemployed are still liable for their debt. This is different from federal loan where the federal government provides an alternative to the hardship of unaffordable loan repayment by writing off the entire loan.
As we have seen above, private student loans are only valuable when filling the gap between total college expenses and a borrower's awarded financial aid. To use private student loans as a substitution to federal aid, rather than a supplement is short-sighted on the part of the borrower. Here, it is advisable to consider the pros and cons of a private student loan before you make the correct decision.