Personal Loans

If you're used to supporting yourself and possibly a family, you might be concerned about making your dollar stretch far enough for your educational program. Fortunately, lenders can help you reach your funding goals through a variety of personal student loan programs. When you use your credit properly, you can pay for school without having to drastically change your lifestyle.

The rates on most personal student loans are similar to those offered with credit cards. Your interest rate and the amount of money you can borrow are based on your income, assets, and employment record. A low credit score may mean a higher interest rate on the loan. It is typically possible to defer repayment of interest and principle on personal loans until you leave school or drop below half time, but the deferred interest is added to your loan's principle.

A bad credit rate shouldn't stop you from securing an educational loan. In the case of poor credit, it may be possible to find a parent, relative, or family friend to co-sign for a loan. Be aware, however, that your loan repayment will affect your co-signer's credit. The co-signer will be notified of late payments or defaults, and if there is a problem with repayment, the bank may hold your co-signer liable for repayment of the loan. Repayment problems can also affect the co-signers credit. Be sure your co-signer is aware of the risk before they sign the paperwork.

How Your Major Affects Your Interest Rate
Your loan package can be drastically affected by your academic record or choice of major. Students in majors with lucrative career options--such as medicine, law, or business--sometimes receive the best loan rates and payment plans. Because those high-income careers require more education, banks expect them to borrow more money than students in other fields. The lender makes more money in interest payments and is likely to offer them a lower rate to entice a potential customer.

Another strategy you can use to try for a better rate is to go with a lender you know. Many banks extend discounted rates to existing customers, family members of mortgage customers, or credit card holders. Contact the banks where you and your family already do business, and see if it's possible to get a deal on your student loan.

Personal student loans may require more research than their Federal counterparts, but finding a good plan with a competitive interest rate can be your final step towards financial security that works while you're in school.