Private Student Loans Review: Just the Ugly!!

Good afternoon all of you students out there!  If you are anything like me, you probably may not have had enough financial aid, no scholarships, and not enough assistance through federal students loans, the alternative was private student loans.  Just because I regret obtaining them doesn’t mean they won’t be ideal for you.  These private student loans are there when you need them, but they have many drawbacks.

There are many different credit companies out there who are willing to grant students a private student loan.  Some of these companies even have better interest rates than credit cards.  It really all depends on your credit and your income, which leads me to the first con I will talk about.  Life happens people, and when it rains it pours.  There’s a possibility that maybe somewhere in your past, there has been some kind of catastrophe that causes bad credit.  Divorce and health problems come first to my mind, but there are many other reasons.  Therefore, if you apply for a private student loan, and you have bad credit, private student loans will ask for a co-signer, usually close family.  Whoever co-signs on a private student loan also must meet credit criteria and in good standing.  The usual credit score is a 720 or more. Unfortunately, there are some families out there that would prefer to not co-sign on any type of loan.  Even though someone signs on as a co-signer, if something happens and you the student can’t pay for your private loan, the co-signer is 100% equally responsible to repay these loans.  Trust me, this can cause some bad family blood there.

A second con about private student loans is that the interest rate is usually variable instead of fixed.  This means that the interest rate on these private student loans can increase for no reason during the life of the loan.  Bummer!  Since we are talking about interest, some private student loans require the student to make interest payments while still in school.

Repayment plans on private student loans are also lacking with patience when compared to their counter part, federal student loans.  With private student loans, if something happens and one is unable to make the payment on them, they cannot be refinanced or consolidated together.  In my experience, private student loans will only grant you one forbearance.  After that, you are on your own.  If circumstances get worse, or at the least get no better, and you still have problems repaying the loans, it is most likely going to affect your credit score.  If the credit score was bad before, it will be worse now.  At least this is what happened to me.  Some private student loans don’t have deferments either.

I have only talked about the negatives of obtaining private student loans.  However, there are some advantages for them.  I encourage one to do their homework in order to make an informed decision.  I suggest one to visit www.estudentloan.com to obtain more information about private student loans.

So good luck, and I wish you well in completing your education.  Private student loans is one alternative to take, but there are other alternatives to explore.  I am looking forward to hearing from you  all out there.  Tell me what your experiences have been with private student loans.  Hopefully, your experience will be much better than mine.  So come on all of you students out there, give me your two cents worth.

Until my next blog,

Good day friends!!!

 

 

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