07/22/2020
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๐๐ ๐๐๐ sign up for them! Trust me. In my experience, it was a horrible decision. While there are some exceptions, youโll typically be hard pressed to find anyone who is happy they took out a private loan for school ๐โฃ
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I ๐ช๐๐๐ someone had told me this when I was starting college ๐ฅบ
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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. โฃ
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The loan I took was for $10,000 and had an initial interest rate of 10% ๐ญโฃ
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Here's what I didn't know and understand: โฃ
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1๏ธโฃ Private loans typically have a ๐ฏ๐๐ซ๐ข๐๐๐ฅ๐ ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐ซ๐๐ญ๐. 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 ๐คฏ
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2๏ธโฃ 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 $16,000๐ซ โฃ
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3๏ธโฃ 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 ๐ต
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4๏ธโฃ If federal loan options won't cover the total cost of tuition and living expenses, other options can include seeking out scholarships and grants ๐ค
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5๏ธโฃ If all else fails, then it might be a good idea to consider a less expensive option for school ๐
๐๐๐๐๐ this post with someone who might be considering a private loan! โฃ
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๐๐๐๐ this post for future reference!