07/22/2020
𝐀 𝗪𝐎𝐑𝐃 𝐎𝐍 𝐏𝐑𝐈𝐕𝐀𝐓𝐄 𝐒𝐓𝐔𝐃𝐄𝐍𝐓 𝐋𝐎𝐀𝐍𝐒
𝐃𝐎 𝐍𝐎𝐓 sign up for them! Trust me. In my experience, it was a horrible decision. While there are some exceptions, you’ll typically be hard pressed to find anyone who is happy they took out a private loan for school 🙃
I 𝗪𝐈𝐒𝐇 someone had told me this when I was starting college 🥺
At 17 years old, I was able to go through the entire process of securing the private loan by myself and all I needed was one of my parents to sign off on it. I had exhausted my federal student loan borrowing options and needed more money to be cleared to start my first semester of college. In desperation, I decided to sign up for a private student loan.
The loan I took was for $10,000 and had an initial interest rate of 10% 😭
Here's what I didn't know and understand:
1️⃣ Private loans typically have a 𝐯𝐚𝐫𝐢𝐚𝐛𝐥𝐞 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐫𝐚𝐭𝐞. That means that while you may start out paying 8% or 9% interest per year, that figure could rise to 10% or 11%, thereby driving up your payments and loan balance astronomically 🤯
2️⃣ That loan was going to immediately start accruing interest while I was in school for the next 6 years. By the time I graduated and started paying the loan it had grown $6,000 in interest on top of the initial $10,000 for a total balance of $16,000😫
3️⃣ If you find that you can't make your monthly payments to the point where you default on your loan, your lender could get a court order to garnish your wages (take part of your paycheck), thereby making an already tough financial situation even worse for you. With federal loans you can request deferment on your loans 💵
4️⃣ If federal loan options won't cover the total cost of tuition and living expenses, other options can include seeking out scholarships and grants 🤑
5️⃣ If all else fails, then it might be a good idea to consider a less expensive option for school 😅
𝐒𝐇𝐀𝐑𝐄 this post with someone who might be considering a private loan!
𝐒𝐀𝐕𝐄 this post for future reference!