Private Student Loans

Written by Seth Cotterell
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The United States government is the single largest provider of college financial aid to students. The government provides aid in the form of scholarships, grants, loans, internships, and work study for students of diverse backgrounds and situations. Available federal aid is not always adequate to meet college expenses, however.

If federally funded financial aid is not enough to pay for college, students do have other options. There are many private organizations that award scholarships, grants, and loans to eligible students. Eligibility requirements vary depending on who is providing the money and you'll want to research those thoroughly before applying.

Student Loans from Private Organizations

Financial aid from the private sector most often takes the form of private student loans. These are not the direct loans given by the federal government. These are loans from banks or credit unions that are given to students for college expenses. Banks and credit unions often have different eligibility requirements than the federal government.

Private student loans usually have a higher interest rate than federal student loans. Also, because a young student represents a greater credit risk to them than he or she does to the government, banks or credit unions might require a cosigner on an educational loan. A cosigner can be a parent, family member, or friend who is willing to assume some of the risk. If the student fails to repay the loan amount, the bank can attempt to get the money back from the cosigner.

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