Do You Have Enough College Money Available?

Do You Have Enough College Money Available?

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private student loans

Children seem to grow up so fast — one moment you’re changing diapers and what seems like moments later you’re watching them play high school sports, get their driver’s license, and prepare for college. The college preparing part can be the most unnerving of all as you hope that you taught your children right as you release them to the world. You also hope that you have enough money on hand to pay for tuition, board, books, and related college expenses.

Not too many families can say that they are financially prepared to pay for their children’s education. Tuition is increasing at a rate well above inflation, pushing private education costs past $30,000 per year. Even public education is becoming more costly, particularly when all of the related expenses with schooling are factored in. 529 plans, scholarships, personal savings and grants may not be enough and not every family can rely on government Stafford Loans to fund their child’s education. Fortunately, private student loans are filling the gap for thousands of families caught in a financial short fall. Let’s take a look at how you can make private student loans work for you.

Calculate How Much Money You Will Need

Tuition, room/board, books/fees, transportation, computer and printer are some of the expenses related to education. Clothing, allowance money, and emergency funds should also be included as part of college expenses. These costs can be offset by money on hand, gift funds (from grandparents and other relatives), Stafford loans, PLUS loans, college savings funds, scholarships, other gift aid, even prepaid tuition. Use a financial calculator to determine what funds you still need by adding up college costs and subtracting the funds on hand. This “deficiency” is the amount you will need to borrow in order to meet expenses for the coming school year.

What You Can Borrow

Private student loans allow applicants to borrow as much as $30,000 per year, even up to $40,000 if college expenses are above $30,000 annually. Your son or daughter can apply for the loan, but because it is a credit-based lending instrument, the lender may be looking for a co-signator. Likely, that will be the parent(s) or other adult who has an established credit history.

As with other loan options, the higher your credit score the lower the rate will be on the loan. Students who have two years of employment history, proof of current income, at least 21 months of credit history (and currently in good standing), have lived at no more than two addresses during the past 12 months, and are U.S. citizens can apply for college loans themselves. Clearly, the majority of students will need a co-signator, but obtaining a loan based on one’s own name is possible if the foregoing criteria has been met.

Quick Approval From Lenders

Lenders who specialize in private student loans can offer a quick approval and get funds to borrowers in as little as five business days. Funds are sent directly to the borrower and, just like a Stafford loan, repayment begins after college has been completed.

Yes, the cost of college continues to rise but with private student loans factored in, many families are able to educate their children at even the most expensive private universities.

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