With the cost of college and university education rising everyday, students have to endure a greater burden when it comes to their education. For some universities the financial expense is so profound that there is no other way for students to fund their education other than turning to loans. Although the government loans have been more popular, private student loans are being considered by a large number of students today in order to fund their college education because of the various advantages that they offer.A Background
For college financing private student loans can be very helpful. These loans will generally be approved based on the family assets, income and various other factors. The amount of loan that would be approved for each student would be different and would depend on many factors. Students who are looking for financial aid will have to research extensively and will have to consider different lenders before making any decisions.The Advantages of Private Student Loans
• Quick approvals: These loans get approved in just around five working days and the funds are made available to the student directly. With government loans, the funds are normally transferred to the college and not to the students.
• Higher loan amounts: Private lenders generally offer higher loan amounts compared to the government loans. With government loans the amount is normally capped at $30,000 per year when the average education costs normally exceeds this amount.
• Wide range of options- These loans offer several great options to the students and are not as restrictive as the government loans. The loan can be used for school supplies, laptops and for any other study related expense.
• No involvement of government- With private loans there would be no extensive government paperwork and the funding would be private which means simpler and faster processing.The Disadvantages of Private Student Loans
• Credit checks- one of the main disadvantages of private loans is that a credit check would be required in order to get an approval. Only those who are creditworthy would be eligible for the loan. In several cases a co-borrower would be required for the loan. Normally parents co-sign the documents with the student.
• High interest rate- another disadvantage of borrowing privately is that the interest rate would normally be higher than the government loans. Also, these rates are normally variable so they can change any time. The rates can increase at any given point of time during the loan term.
• Multiple applications- For a private loan an application will have to be filed separately for every academic year. However, this is also true with government loans.