How to Pay for College: Private Loans from Non-Financial Institutions

Using private loans to pay for college can provide you with a number of unique benefits as a borrower. While federal loans can be beneficial, sometimes it becomes necessary to utilize a private loan for your education needs. Here are the basics of obtaining private loans for non-financial institutions and how it can help you as a borrower.

Private Loans for College

With the growing cost of a secondary education, is becoming more and more necessary to borrow money to go to school. Not many people have enough money saved up to pay for college and all of the expenses involved with attending. Federal loans are often used because of their low interest and simple approval process. However, these loans are often not enough to cover everything. This is where private loans can come in very handy.

Many people in this situation turned towards financial lenders for a loan. However, they quickly find out that this may not be the best option. Financial lenders typically have very strict standards and difficult approval processes. At this point, it may be to your advantage to turn towards private lenders and private sources of funds.

Family Members

One great potential source of funds for college is a family member. Family members typically want to see you succeed and are therefore willing to help you in whatever way they can. If they have extra money, many of them may be willing to lend it to you in order for you to attend college. The great thing about working with family is that they are flexible. They will typically give you the money at a very reasonable interest rate and your credit score will not be involved in the approval process. You should be able to work out a flexible repayment plan that allows you to wait until after college to pay them back.

Check with multiple different family members to see if anybody would be willing to help you. If one family member does not have the funds that are necessary, you may be able to get several family members to pool funds together in order to help you.

However, when borrowing money from family members, you need to keep in mind that this could put a strain on the relationship. Therefore, you should treat this situation with extreme care and make sure that you repay the money to the terms were agreed upon.

Private Lenders

If no family members are available to help you, another option to consider is using a private lender. Private lenders are individuals that have extra money to lend. They are often seeking alternative forms of investment and see someone that is attending college as a good investment opportunity. They often will make lending decisions on a case-by-case basis. Therefore, your credit may or may not play a factor in their decision. The interest rates that private lenders charge will usually be on the high side, but if you need the money it can be worth the cost.

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