Private College Loan
A private college loan is a good option when federal loans, grants, and scholarships aren't enough to make ends meet for your higher education. These loans, made by private banks, can help you to cover up to 100% of your costs, including tuition and fees, textbooks, room and board, and even transportation costs. A private college loan may also offer perks that federal student loans won't, such as the ability to get loan approval quickly online.
Of course, it's important to emphasize that, although these private loans are a good tool when used properly, you should exhaust all other options such as Federal Student Loans, scholarships, and grants, before resorting to a private college loan. Why? Because although many of these private loans will offer very competitive rates, you will likely find that many of them will involve interest rates that are somewhat higher than those offered by federal student loans, and these rates could likely be variable, which could lead to higher interest rates down the road.
These private college loans are not federally-backed, so the lender will be required to run a check on your credit, just as they would for any other type of private loan. Because of this, you may want to strongly consider having a co-signer, such as your parents, to help secure this type of loan. Even if you're credit is established well enough that you can secure the loan on your own, having a co-signer could increase your chances of getting that loan at a lower interest rate. Don't let pride get in your way when it comes to being financially smart -- even if having a co-signer only lowers your interest rate one percent, that could add up to huge interest savings over the life of the loan.
Remember that, although a private college loan will allow you to borrow up to the full cost of your education, you should really put some thought into how much you'll actually borrow. Even though it's easy to go overboard when 
you find out how much you can actually borrow, you have to bear in mind the fact that all of the funds will have to be repaid, plus interest. It's worth a little inconvenience in the present to avoid being swallowed by debt after you graduate.
Some types of private college loans will require you to begin making payments while still in school, and some will allow you to defer payments until after you have graduated. Still others will require interest-only payments while you're attending college and for the first six months after graduation, then you'll begin making normal monthly payments. Be sure you shop around for a loan with payment terms that fit your individual needs.
Again, some self-discipline has to come into play here. Although you don't want to bite off more than you can chew, if you are able to make small monthly payments towards interest on your private college loan while in school, this will amount up to big savings on the total amount you'll end up repaying for this loan. Ultimately, however, this is a decision that you'll have to make alone -- if you feel that you would be overburdened financially by making payments while in school, you may be better off with a private college loan that allowed you to defer payments until you graduate. Again, put some serious thought into your personal situation, and also into the offerings of different private banks.
Also bear in mind that a private college loan may come with various types of fees you're not accustomed to seeing with federal student loans. For instance, you may be charged an application fee for the bank to process your loan application. This fee in no way guarantees your approval for the loan. You may also be charged origination fees, and/or repayment fees. Again, it pays to do your homework, shopping around to learn more about the options offered by different banks.
A private college loan can be a great option when you need help financing your education. They offer competitive rates, and repayment plans tailored to meet the specific needs of college students. But before applying, be sure you've made the most of your federal student loan options, grant offerings, and scholarships. Once you know you'll still need the assistance of a private college loan, be sure to shop around. Because these banks are part of private industry, they're forced to compete with each other for your business. Use that to your advantage to ensure you're landing the best deal when seeking a private college loan.
See our Other Resources page for helpful information on this and other topics related to financing your higher education.
Next: Education Loan Consolidation