We know that applying for private student loans for college is not on your list of fun things to do. However, Federal student loans may not cover all college expenses, so what do you do? Private student loan may just be the answer. This article will give you answers to the most commonly asked private student loan questions and help you to feel at ease as you apply for your private student loan.

1. What is the difference between a Private Student Loan and a Federal Student Loan?

Private Student Loan are designed to supplement federal loans when federal loans and other aid have been exhausted or just are not enough to cover the entire cost of your education. It is best to get private student loans as a last resort and only when you have used up all other federal student aid available to you.

Federal Student Loans usually come with lower interest rates than private student loans. Federal loans have standard rates and fees which may vary by lender. Federal student loans have fixed interest rates, while private loans typically have variable interest rates.

2. When should I apply for a Private Student Loan?

You should apply for a private student loan as soon as you have received your acceptance letter from the school you plan to attend. However, there is no time restriction so you can apply for private student loans at any time during your college education.

3. Do I need a co-signer if I don’t have good credit or have not established credit?

You should still try on your own first, keeping a co-signer as a back-up plan. However, if you do need a co-signer you will need someone who is an eligible U.S. cosigner to qualify.

4. Can I use a private student loan for other than tuition?

Yes. The student loan you acquire can be used for any education-related expenses, such as fees, books, a computer, school supplies, room and board, and transportation among others.

5. Are loan payments required while I’m still in school?

No. While you are enrolled in at least half-time, you can choose to defer all payments until completion.

6. What are my options if I cannot make my minimum monthly payment?

During the student loan repayment period, you may request forbearance. Forbearance is based on financial hardship and is a temporary postponement or reduction of loan payments, for a maximum of six months. Forbearance is granted at the lender’s discretion.

7. What happens if I don’t repay my Private Student Loan?

If you do not repay your private student loan according to the terms disclosed on your promissory note, you may eventually be in default on the loan which can damage your credit worthiness. Negative consequences may include:

• A negative effect on your credit rating that may limit your ability to obtain future credit.
• A requirement to immediately repay the entire amount of the loan with interest.
• Withholding of your wages.
• If there is a co-signer, they too will suffer the same negative consequences.

Knowing about private student loans make a difference between getting the money you need for school or sitting the semester out.