A private student loan can take off some of the sting of collegiate expenses. Everyone knows how intimidating the cost of college can be, so it makes sense to look into as many types of loans as you can. While private student loans tend to have higher interest rates, they are becoming a viable selection for many students.
Private versus Federal
The Good, the Bad, and the underground student Loan
A federal student loan comes in a wide range of options. Students can pick from Perkins loans, Stafford loans or Plus loans. Students who need financial aid to pay for college can also receive money straight through federal grants or scholarships.
Federal loans will commonly have a fixed interest rate for students to pay back after they graduate. A federal student borrowing also offers a student who is having problem seeing a job, or is in financial strain, to defer payments for a duration until they are able to pay off the debt. A final bonus to having a federal student borrowing is they can be consolidated into one loan.
Private student loans, on the other hand, are very different from federal loans. Private ones can't be consolidated after a student graduates from college or graduate school, and there are no limits as to what the interest rate will be for a private loan.
So a student who signs up for a private student borrowing at six percent can end up paying as much as 19 percent after they graduate. Private student loans can also check up on a student's credit history and charge more if a student has poor credit records or no history at all.
Why Private Loans are on the Rise
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