Private student loans are not guaranteed by the government and their interest rates are not capped. Before considering one, make sure all government and institutional financial resources are exhausted.
If there are no other ways to fill the financial gap, shop around and do research before choosing a private loan. Keep written records of all forms, applications and correspondence with your lender, especially regarding discounts and special deals, for the entire life of your loan.
Questions for lenders:
–What is your lowest interest rate and fee combination and how can I get it? Is the rate only for a limited period, or is it for the life of the loan?
–Is there a limit on how high the variable rate can go? How often is the interest rate adjusted, and how is it determined?
–What interest rate can I get on a fixed-rate loan?
–How long will I be repaying the loan? Is there any penalty for paying it off early?
–When do I have to start making payments? How long can I defer payments while I’m in school? If I go to graduate school and defer payments, how much will I owe when I do start making them?
–Will I lose my discount for paying on time if I have only one late payment or if I ask for a change in the payment schedule?
–What proportion of your borrowers get the discounts you offer? Are your discounts guaranteed or are they subject to change later?
–Would you allow me to defer or reduce my payments temporarily because of economic hardship? Under what circumstances and for how long?
–How much can I borrow without reducing my eligibility for government or institutional aid?
