| A lot of the government student loan schemes need | | | | application is turned down. |
| no credit check and provide a student with significant | | | | Not having to deal with that frosty and all too often |
| financial aid. But these programs are based on need | | | | irrational bureaucracy is another benefit of private |
| and normally carry other criteria which may make it | | | | loans. Private lenders have customer service |
| difficult to qualify. Even if a student does qualify, | | | | departments which are there specifically to answer |
| these loans only cover a proportion of the whole | | | | questions so that customers can get the answers |
| education bill in many instances. If students are | | | | which they are looking for. Federal loan schemes |
| caught in this position then they could look to private | | | | typically have contacts and help available as well but |
| alternative college loans to make up the difference. | | | | the answers one gets are hit or miss when it comes |
| Private alternative student loans too have their own | | | | to quality. |
| set of pros and cons. A credit check is almost | | | | Other considerations which make private alternative |
| universally required and this is not a problem as long | | | | loans especially desirable include: |
| as you have a good credit history. The problem is | | | | The fact that neither parents nor students have to |
| that 'good' is very much a relative term and if it is | | | | fill out FAFSA (Free Application for Student Aid) |
| not good enough then you might find that you are | | | | forms and provide a lot of additional documentation. |
| paying higher than the normal interest rates. | | | | Private loan applications are a lot simpler and indeed |
| Over and above the quoted rate of interest there | | | | the whole process is easier. However, interest rates |
| are additional monetary implications to private | | | | and fees could be higher or lower according to the |
| alternative loans. Fees will generally be added on to | | | | particular loan program. |
| nominal loan amounts and a reasonably small loan of | | | | The best private loans carry zero fees and interest |
| $3,000 can easily have fees of 4% added before | | | | rates which are roughly equal to the prime rate. This |
| distribution. That means $120 of the total loan will not | | | | is the rate which banks charge each other or charge |
| be seen by the student but nevertheless has to be | | | | their largest and special customers. If you are able to |
| paid back. As a very rough guide, every 3% of fees | | | | get an interest rate at prime then this is a very good |
| is equivalent to 1% added to the stated interest rate. | | | | deal and locating a rate at 1% below prime is a truly |
| Private loans do have some advantages. | | | | great deal. |
| The first and probably the most obvious advantage | | | | To obtain that sort of loan it is generally necessary |
| is that funds are available. Private lenders make a | | | | for you to have a very good credit history or to |
| profit from the interest and fees which they charge | | | | apply for the loan with a co-signer to the loan who |
| and so have a vested interest in making funds | | | | has a great credit history. |
| available to borrowers and they will try very hard to | | | | At the end of the day, the only way to find out |
| see that each and every applicant qualifies. Federal | | | | whether an alternative loan will satisfy your |
| lenders on the other hand adhere to an inflexible set | | | | requirements is to go out into the marketplace and |
| of criteria and there is generally no appeal if your loan | | | | see exactly what is available. |