One major question students often have when considering private student loans is, “What can private student loans be used for?” Should you use your loans to pay for your spring break or Christmas gifts? That’s probably not the best idea. What about books or computers?
Private student loans can be used to pay for a variety of college-related expenses, including:
- Room and Board
How Much Should You Borrow?
Generally, you can take out a private student loan for the cost of attendance minus any scholarships, grants or other financial aid you receive. However, smart borrowing means that you should only borrow what you need and what you can pay back.
Private student loans should be considered after you’ve checked out all of the other, free sources of college money, such as scholarships or grants. You should fill out your FAFSA application first and receive your Student Aid Report, so that you are aware of what you are expected to pay once your financial aid package is processed.
We recommend that you apply for a private student loan with a co-signer. Having a co-signer can help you quality for lower interest rates, as well as provide some extra assurance to you should you need help paying back the loan.
Keeping Expenses Low
You can get by on less than you think. If you’re still in high school, don’t intentionally plan to lean on loans to help you get through college. Instead, take this opportunity to purchase the things you will need for school in advance, such as computers, airline tickets, and housing needs, and then put the rest toward paying for tuition and books.
If you’re about to enter college, or you’re already in college, keep costs low by buying used books, planning to travel to and from school with friends, or seeking lower-cost housing opportunities. If you end up not needing all of your student loan, use the extra to make interest payments while you’re still in college. Paying the interest in advance can make a huge difference in what will be due once your grace period ends.
Comparing Your Options
When you’ve decided that you need to find a private student loan to cover your education expenses, be sure to use a comparison tool so that you can see loan options from multiple lenders. Don’t forget to look at several factors, including interest rate, terms, and length of the loan.
Putting It All Together
It would be wonderful if every prospective and current college student could attend school completely free, but we know that’s not the reality. Across the country, financial aid budgets are tightening, and students and families need to find alternative sources of college money. If you need to find a private student loan, you should find one that’s right for you, and then spend it wisely.