You’re one of the scores of people annually who need a student loan to pay for their higher education and related costs. You’ve been putting off finding one because you don’t know the process. However, you’re hurting yourself in doing so because you could miss out.
What’s more, you know that your federal financial aid doesn’t cut it, and neither do those smallish scholarships you got. So now you need to turn to private student loans to help you get through the school year. You’re far from alone: from 2019 to last year, the number of loan originations by private lenders rose by more than 10%.
Here are steps to take to find a private student loan.
What’s the Difference Between a Government and Private Student Loan?
It’s the government that issues federal student loans, while private student loans are offered by a private-sector lender. Between the two, benefits, interest rates, and repayment options can vary significantly.
Is it Hard to Find a Private Student Loan?
Knowing the process makes it easier for all types of student loans. For private student loans, you’ll need to do your homework. Get quotes from the top lenders and, while you’re at it, you may want to see if your school has a preferred lender list for you to hit up. Once you do that, you can compare payment terms, interest rates, and fees to come up with the best loan for YOU.
Note that most institutions only do a soft credit check, which doesn’t ding your credit, to gauge your eligibility. Don’t apply, though, until you know precisely how much you need and after you’ve selected the school of your choice. Also:
- Get the timing down. While you can apply for private student loans throughout the year, it’s best if you submit formal apps within 30 days of each other to not unduly affect your credit score. Also, prepare for snags in the process by not waiting until your tuition is due to apply, and by remaining atop of expenditures.
- Note eligibility. Each lender has its own eligibility requirements, so you might want to have a co-signer on deck just in case, particularly if you don’t think your income is sufficient or if you have a thin credit file. For undergraduates during the 2020-2021 school year, a whopping 91% required a co-signer (with good credit) to qualify. Check out these reddit student loans tips for more on that.
- Get your paperwork together. To make the application process easier, have all your documents and info organized and on hand. For instance, you’ll need your social security number, contact info, date of birth, employment info, latest tax returns, and rent or mortgage values. In addition, you’ll need the name of your school, when you’re expected to graduate, and how much you wish to borrow (borrow only what you need).
- Formally apply. This is where you’ll need the above records and info. Note that some lenders will approve you right away while others will take up to a week. Also remember to exercise caution when picking a loan over another, since each lender has different rates and terms.
Now that you know the steps to take to find a private student loan, you can begin the process with confidence. Don’t wait too late, though — timing is everything. We also suggest that you begin your private student loan search with Juno, which seeks to make higher education more affordable and accessible.
