I never pictured myself writing about private student college loans – or federal student loans for that matter – as I have a college degree and 2 graduate degrees and was happy to see the last of my many loans, both federal and private, paid off after years of monthly payments. But… Now one of my kids and my niece are looking at loans and here I am – full circle.
I swear I feel like Michael Corleone in one of those Godfather movies – you know the line – “Every time I feel like I’m out, they pull me right back in” or something dramatic like that. Hey, I’m being forced to relive my student loan drama through my daughter and niece. I thought I was too old for this but since everyone is depending on me to help, given my experiences, I think this is a perfect time to help everyone.
That’s right peoples – You’re getting the same treatment Daddy Poorbucks gives his own. And really, at Loan Camel, you are my own – all of you. I live to help people avoid mistakes I made and do better than I did. It’s hard to explain but I think that there is a real sense of regret in not knowing better and doing better when I was up to bat and that burns me up to this day so since I can’t change it for myself to make not so little old me feel better about the way I handled things, I make myself feel better by helping others do better for themselves.
I know, it’s a little psychotic, right? Tru dat but that’s just the way I’m built. I suffered so you don’t have to. Loan Camel exists to help people over the hump… and then some. So to kick this private student loan party off right we need to distinguish federal from private student loans and put these private student loans in their place. Ya dig, man? Oh, one more thing. I’m going to help you get a huge jump start on building your credit up before you graduate college too.
Federal student loans, grants and scholarships – any federal money available to you – is your starting place for student loans – PERIOD. Aside from having great rates, they have great flexibility in terms of payments and down the line they provide options with:
You cannot beat that with a bat, trust me. And what’s up with all the baseball references, I don’t even like baseball? Anyhow, ignore the ADHD in me, it happens. So, these federal loans are the best loans for you and they are your starting place. Wait, why starting place, why not get all of my loans from federal sources???
Glad I asked, now I’ll answer – and it’s simple yet unfortunate too. Federal student loans are often not enough to cover all of your borrowing needs… and that’s where private student college loans come into play. Private student loans, to me, are supplemental loans used to bridge the money gap between the cost of your tuition, books, room & board and the amount of money available to you from federal sources such as federal loans, grants and scholarship monies.
So the unfortunate thing with private student loans is that they are not eligible for the federal benefits like loan forgiveness and income-driven payment plans when you graduate. The other challenge is that while Federal student loans aren’t credit score driven, private student loans are credit score and income history driven so a cosigner is almost always needed.
So while this is a downside, there are now private college student loans available with great rates too. Knowing this, you want to maximize your federal funds available first and then turn to private funding for the balance of your student loan needs.
Get it? Got it? Good!
The eligibility requirements for getting private student loan loans are really straight forward. Generally:
Items that you can use private college student loan money for consists mostly of:
Be careful in how you spend your money. It’s very easy to go overboard and rack up huge debts so make sure to work within a budget that you stick to and any income that you are able to earn to assist you will go a long way in keeping your repayment numbers down.
Federal student loans can be deferred until after graduation. There are private student loans which can also be deferred until after graduation as well. But this is where you have a decision to make and I want you to think like old Daddy Poorbucks right now not young Daddy Poorbucks.
My personal preference, knowing what I know now, and having both failed and ultimately succeeded financially, is a private student college loan with minimal payments while in school, and for 2 reasons:
Even if you are paying credit card bills each month, you are now also paying down on a loan which will show as a string of on-time payments on a mix of credit types. And payments can start as low as $25.00 per month so this is really a good way to build credit with little effort and financial strain.
Our private loans are funded through 100’s of community banks and credit unions and serviced directly through our partner. These financial institutions are known for having some of, if not, the best private student loan rates out there. They are generally community and membership driven and value servicing people.
These loans are also free of fees and early payment penalties and are easy to see rate and apply for right here through Loan Camel. To see what rates that community bank and/or credit union funding can provide you, whether variable or fixed, feel free to check out what’s available by clicking here.
For more information on the differences between the missions of credit unions vs. banks, in the words of a major credit union advocacy group, please visit the web page for America’s Credit Unions.