How to Find a Loan for Private Education

You do not need to use a private education loan to pay for a private education. Federal loan options can be applied to college at both public and private institutions. However, because private education tends to be costlier than state-sponsored schooling, you will likely need to use a combination of both federal and private loans to fully cover the cost of tuition. Start with free grant options, then seek federal funding, and finally use private loans to fill in gaps.

Grants and Scholarships

You should begin looking for grants and scholarships right in your hometown. Your high school may offer grants to graduating seniors, or your state may have grants for students going on to private schooling. Once you have exhausted local options, look to the college you will be attending for further choices. You will find a plethora of scholarships and grants available to students based on race, ethnicity, gender, major or fiscal need. Ask the office of financial aid at your chosen college which options may be available to you, and start applying. 

Federal Funding

Federal loans are given directly through the Department of Education. These loan options have a number of advantages. Interest rates tend to be low, there is no prepayment fee if you repay the loans early, and you can consolidate the debt with little or no penalty. If you are financially needy, the Department of Education will have even more loan options available to you. You can seek Pell Grants, which never need to be repaid. Subsidized loans through the Stafford program have an interest free grace period during all four years of college if you qualify. You can even capitalize on the HOPE tax credit, which allows you or your parents to deduct the first several thousand dollars of education costs, including textbooks, from their taxable income.

Private Education Loans

Federal loans have limits. The limits are set on an annual basis, and you cannot continue to take funds out if you have exhausted your limits. Because you have chosen to attend a private college, chances are the limits will not be sufficient to fulfill your tuition needs. At this point, it is best to seek private loan options. Start by working with lenders known to you, such as the bank that houses your checking account. Typically, lenders are more receptive to loan applications from existing customers, if those customers have a good history with the lending institution.

Living Expense Loans

Regardless of how needy you are or whether you elect a private or public loan option, you will not be able to cover your living expenses through federal loans. The loans are tuition only, and some private loan programs are as well. You will need to seek additional debts in order to pay for room and board, dining or entertainment expenses. A student credit card can be a great option to handle these expenses as they arise. Credit cards are extremely flexible for students who intend on working during breaks. They can used earned income to repay debts as they go, eliminating a portion of costly financing fees.

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