In a survey of over 1,200 parents, we've learned that 29% of them made their decision on student loans by May 1st. Here’s why it’s important to get that early jump on the process.
Keys to Getting the Funding You Need
Here at Nitro, we recommend first exploring all of your free options (savings, scholarships, grants, etc). After that, look into the federal loans provided on your Financial Aid Award letter from your college.
If there’s still a gap, private student loans may be your next best option.
Interest rates and payment terms vary. There’s a lot of competition out there and you can use that to your advantage in your quest for the most favorable terms. Starting early allows you to get the best rate and terms for your financial situation.
When you have the time to comparison shop, you have the option to go out your own pace, not pressured by the universities. This will minimize the chance of bad decisions that could hurt your financial future.
Finally, how about your peace of mind? Comparison shopping and considered decisions will help ensure you and your student are settled in the near term, while also being set up for success in the long term.
How Do You Know You're Ready To Apply For A Private Student Loan?
Below are some of the most common questions asked before making a decision to take a private student loan. Many of the answers can be found here.
- What is the minimum and maximum I can borrow?
- What is the interest rate, and is it fixed or variable?
- When do repayments begin--immediately or are they deferred until graduation?
- How much time will we have to repay the loan?
- When does interest start accruing?
- What will the monthly payments be?
- Will I need to co-sign?
- If I am a co-signer, when can I be removed from the loan?
The Role Of The Cosigner
It’s a rare situation that a high school student will qualify for a private student loan without a cosigner. This is a parent, spouse or family friend who co-signs the student loan application with the student. The co-signer agrees to share the responsibility for repaying the loan. A cosigner must:
- Have a verifiable income
- Show a good credit history of borrowing, charging and repayment with few or no late payments on their credit report
- Exhibit no excessive delinquencies, judgments or bankruptcies pending, filed or discharged in the past two years
- Have no prior student loan defaults
- Be a U.S. citizen and at least 18 years of age
NOTE: Most private lenders will allow a co-signer to be released from the loan once a total of 24 consecutive, on-time payments have been made.
What Do You Need To Make A Decision?
Private student loans help bridge the gap between the cost of school and the funding you have (scholarships, grants, savings, federal loans).
Once you receive your financial aid packet from the school, you'll have the cost and amount available to you through grants, scholarships, and Federal loans. The school will have already factored in your Estimated Family Contribution (EFC) and subtracted it from the Cost of Attendance (COA).
Any outstanding cost listed is the responsibility of the student and parents. This is where private student loans come into play. These are offered by banks and independent lending institutions, and you'll have to apply through them directly.
Private lenders have their own approval criteria, and there will be variations in interest rates, loan limits, processing fees, and repayment conditions. The sooner you collect your information, that better the decision you can make for your financial future.
Source: Nitro's Parent Scholarship