What are Private Student Loans?

Private student loans are college loans offered by private lending institutions like banks, credit unions and other non-governmental financing companies. They are also known as "alternative student loans" or "personal student loans".

Uses of the Funds

Most students turn to private loans when funds obtained from federal student loans, grants, and scholarships are not enough to cover all of their educational expenses. Private loans serve as supplementary finance sources.  Similar to governmental student loans, these loans can be used to pay the costs of books, tuition, rent and board, computers, projects, and any other related college expenses.  The uses for private student loans are extensive.

Interest Rate Comparison

Unlike standard student loans, private student loans are not guaranteed by the government.  Private loans tend to have higher rates and fees. Since private institutions consider these loans riskier than standard loans, the rates and fees tend to be a little higher by comparison.  However, these loans can offer a student the financing needed to complete their studies and are a valuable financing tool.

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