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MoneyWatch: Managing Your Money
By Matt Richardson
Edited By Angelica Leicht
/ CBS News
For many college students, a new school year is just weeks, if not days, away. With so much to prepare and a lot to look forward to, it's understandable if many have overlooked one key element: their financing for the upcoming semester. Millions of students won't be able to afford their college education without the support of federal and private student loans. Because of this, students should be exploring all of their options to help make ends meet. This can include scholarships, grants, federal loans and private ones.
Private student loans, in particular, come with unique advantages that most other financing options don't have. To take advantage, however, borrowers should familiarize themselves with these types of loans and understand when they may be appropriate for their situation.
Start by exploring private student loan rates and terms here now to learn more.
3 big private student loan benefits borrowers should know
Private student loans operate differently than federal loans — but that doesn't mean they can't still be beneficial. In fact, there are some major benefits of using this type of financing. Here are three perks borrowers should know:
Higher borrowing limits
The cost of a college education is high and there aren't any signs that it will be less expensive in the future. In this environment, federal student loans may not be enough to fully fund your education. But private student loans have higher borrowing limits, allowing students to cover the gap between what a federal loan provides and what is needed to fully pay for your education.
By using a private student loan borrowers can apply for — and receive — an amount that will completely cover the cost of attending school (not accounting for any federal financial aid). And this will be provided for each school year up until graduation. While borrowers should always be smart and judicious about how much they actually borrow, private student loans are a great way to fully cover your college education expenses.
Explore your private student loan options here now to learn more.
Quicker approval process
If you still haven't secured all — or any — of your financing for the 2023-2024 school year don't fret (yet). Many private student loan lenders will approve your application within 48 to 72 hours. If you submit all of the required documentation and answer all of the appropriate questions via an online private student loan application you may even be approved in less time.
While those who apply for federal aid won't have to wait weeks, they generally will be subject to a longer wait time than those who went the private student loan route. For students who have waited until the last minute to organize their financing, a few days could be a major difference.
Better terms for those with good credit
Federal student loans are available for students with both good, bad and non-existent credit scores. No matter your credit history, most applicants will be able to secure federal student loan financing without much issue. Because of this, those with clean credit histories and high credit scores won't see much of a difference in the interest rate they ultimately pay.
But that's not the case with private student loans. Just like other private loans, the best rates and terms will be reserved for those applicants with the best credit background. So if you have a high score (or your cosigner does), you'll generally be rewarded with lower rates than you may have gotten with a generic federal student loan.
Check private student loan rates here now to see what you qualify for!
The bottom line
Students who need financial assistance for their college education should typically first exhaust all of their federal options. But that doesn't mean they shouldn't explore their private student loan alternatives, too. Private student loans have some major benefits that could help students this year, including higher borrowing limits and a generally quicker approval process. And those with good credit will often be able to secure lower rates than they could have got with the "one size fits all" rate provided by federal loans.
