Using a Bank to get a Private Student Loan

Using a bank to get a private student loan can be a cost-effective way of rounding out financing for your undergraduate or graduate education. Many banks have private loan programs and will compete for your business.

Know Your Need

A few steps will let you know if you should be using a bank to get a private student loan.

  • Calculate college costs

  • Subtract dollars you can apply

  • Subtract grants and scholarships

  • Subtract federally-backed loans

The amount remaining is what you'll need to cover by using a bank to get a private student loan.

Unique Aspects of Private Student Loans

Before choosing a lender, understand the following points about using a bank to get a private student loan. Private student loans:

  • Often have more stringent borrowing requirements

  • Have market-driven interest rates that typically are higher than subsidized loans

  • Seldom have built-in grace periods as with subsidized loans

Choosing a Lender

Take Your Time - There are many lenders competing for this business. Using a bank to get a private student loan means you need to shop around.

Carefully Compare Terms.  Look beyond the interest rate when using a bank to get a private student loan. Be sure you understand all terms, payments schedule and any possible penalties or fees.

Be Honest. Make sure your lender understands all your obligations. It is to no one's advantage if you are over-burdened financially and cannot make your obligated loan payments.

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