Private Student Loans are Higher Interest
Private student loans are for people who need student loans, but may not be eligible to borrow money from the government, or prefer not to borrow money from the government. The interest rates are generally higher on private student loans than on a federal Stafford loan or a Perkins loan, but private student loans are some student’s only option.
Private student loans can be any type of loan that is not obtained from some type of government source. Therefore, a private student loan could be just a regular loan for students who are not eligible for a government loan, have bad credit or don’t want a credit check.
Regardless of it’s name: a loan is a loan. A loan involves a commitment on the part of the lender to make a definite amount of money available to be placed at the lender’s disposal. It is also a commitment on the part of the borrower to pay the loan back in a predetermined amount of time. The loan agreement usually outlines the payment terms and schedule. These guidelines make a private student loan a legal obligation and a valid contract on the part of the lender and the borrower. This legal document can’t be breached.
The US government has a student loan program that gives all US citizens the right to an education. For that reason, the interest rates on government student loans are usually much lower than a commercial loan.
Most private student loan lenders have no application fees, no application deadlines and the loan amount can be paid after graduation. The funds from private student loans are sent directly to the student’s account and not to the school. Approval for a private student loan can be given in as little as 24 hours.