When grants and scholarships don't cover the complete cost of college, loans are an obvious must for most students and their families. While borrowing money and taking on debt, here are a few things to consider regarding private loans:
- Private loans generally have an interest rate based and borrowing terms based on your credit record and current economic climate. If you have a credit score that is less than perfect, you are likely to have a high interest rate. Your rate will also vary based on current prime rates. Over the course of your loan, you are likely to experience drastic changes in interest rate.
- Federal loans have a six month grace period unlike private loans. Interest also begins to accrue the minute you begin school. While this also occurs with federal unsubsidized loans, the interest rate with unsubsidized loans will be lower than that of private loans.
- Can't find a job after school? Lose your job? Federal loans can be deferred based on economic hardship. This is not true with private loans. It is nearly impossible, regardless of situation, to get a deferment on private loans.