Friday, April 30, 2010

Difficult Economic Times Increase The Need For Private Student Loans

While the nation is still recovering from a massive financial catastrophe and credit crisis, families have watched their savings and home values shrivel away. The thought of sending their children to college has become a great source of despair - considering these are the two biggest contributors families use to fund their child's education.

Adding to the problem, college grants and scholarships are down, while tuition costs continues to rise, creating a large gap between federal student loan caps and the finances required to fund an education. The federal PLUS loan may help bridge this gap, but families are still looking to private funding so they can afford their child's education.

Over the last 15 years, the gap between what grants, scholarships and federal loans cover, and the actual cost of attendance has increased by more than $30,000 for public or state schools and $100,000 for private institutions.

Families who are looking for extra money need to do some research first. Private student loans have a higher interest rates but often have more incentives for the borrower. It is a good idea not to borrow more than you need. A student loan calculator can help families estimate their child's overall financial needs

Local community banks and credit unions are more willing to provide private student loans if you're already in good standing with them. Also, smaller lending outlets may offer a smaller interest rate, so it's a good idea to shop around

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