In today’s world, going to college is becoming more and more important. However, with a bad economy and rising tuition rates at schools, it is becoming more difficult to finance an education. Still, there are several different financial aid options, including one you may have not considered: alternative school loans.
Generally speaking, the first option for financial aid for students is usually student loans. These are federally funded at better interest rates and are dependent on the expected contribution of the student or the student’s family. They are meant to fund the cost of tuition and no more. Sometimes, the expected amount of student loans is not enough, and a student can turn to alternative student loans.
Alternative student loans are similar to federally funded school loans, but they come from private sources. They are still meant for college students, and usually have a stipulation that the student must be enrolled, and as a result, you may not have to start paying for them until after you are no longer enrolled. A benefit of alternative school loans is that you can choose the amount that you borrow – meaning that, even though your student loans may only cover tuition, you can still fund the cost of housing, room and board, and so on, with alternative student loans.
On the other hand, just because the loans are meant for students does not mean they do not have their drawbacks. They are still privately loaned, so they will require a credit check, which will mean a co-signer if the applicant is young and does not have credit established. For the same reason, they will likely have a higher interest rate than student loans. Therefore, it is wise not to take out more in loans than you truly need, even though you will not have to pay for it now.
With the credit crisis and an increase in federal student loan funding in 2008, alternative student loan use has fallen, but that does not mean that it is not a viable option. When deciding how to finance your education, alternative student loans may be the right fit for you.