Applying For Private Student Loans

Q: I just got accepted to college for the fall. I have already applied for FAFSA, should I wait to hear back from them before I start applying for private student loans?

A: Yes, after applying for FAFSA students should wait until they see what their federal financial aid award package is before they apply for private student loans. Until a student can verify what they are receiving in federal financial aid, there is no way to know if a private student loan will be a necessity for that student. Most college financial aid experts will agree that students should avoid applying for private student loans unless absolutely necessary. Private student loans can be a useful tool for picking up where federal financial aid and scholarships leave off, however private student loans will typically not be able to offer the borrower as low of an interest rate, or as many repayment options when compared to federal student loans. If what a student receives from federal financial aid will not cover the full extent of their college education costs, there are a few things to consider before applying for private student loans.

First, consider all of your scholarship and grant options. These are “free money” methods for financing your college education, which unlike private student loans or federal student loans will never have to be repaid. Many students fail to utilize their scholarship options for college because they believe they will not qualify for any scholarships. However, college scholarships are diverse and are awarded for various reasons. By taking the time to research the scholarship opportunities you may be eligible for, you could end up saving a considerable amount of money that would have otherwise been borrowed in student loans.

Second, after exhausting scholarship opportunities, students may also want to consider working a part time or even a full time job to cover the rest of their college expenses. Many students hold jobs while in college and this enables them to pay for their college education without going into enormous private student loan debt.