Consolidate Private Student Loans

Private student loans also called as Alternative student loans are those loans that students or parents of students choose to avail under one of the following circumstances:

• They are not eligible for federal loans
• When the federal loan amount is not sufficient enough to cover all the education expenses

Since these loans are not sponsored by the government, their interest rates tend to the very high. Therefore, it is advisable for you to go for an alternative student loan only after you have thoroughly verified all possible options of federal loans as well as student scholarships. Private loans are offered by various banks, student financing institutions etc. It is also a good option to consolidate private student loans in case you have many of them.

• Alternative student loan interests are based on credit worthiness and hence as a student, since your credit worthiness is going to be less or even nil, you are sure to be in for a high interest rate.
• Try to get a co-signer (a trusted individual such as a parent, guardian etc, who are willing to apply for the loan along with you) whose credit worthiness is better than yours. This will serve to reduce your interest rates and also help you to place a better deal.
• Determine the amount that you will require to cover the education costs even before you apply for the loan. Do not go for a loan unless you absolutely require it.
• Check out if the interest is based on LIBOR index or Prime index. LIBOR index is likely to vary less steeply than the PRIME index and hence most advisable.
• Try to get as many loan quotes from different lenders as possible. Compare the interest rates, repayment options, from which point the interest starts accruing, monthly EMI amount, terms and conditions of the loan offered, penalties for late repayment, what happens if you go to graduate school after college, etc. and then choose the loan that will best work for you.
• In case you plan to consolidate private student loans at a later point if time, try to look out for lenders who offer very less interest rate so that you can look at the same lender at the time when you consolidate private student loans.

Do not rush in for a private loan since there are no deadlines here. These loans are flexible and hence you can apply for one just when a monetary need arises and not necessarily at the beginning of college itself.