Why would you want to take a private loan as a college student? First of all, most students run short of cash during college, whether they have a job or not. If you didn’t qualify for a federal loan or a scholarship, unexpected expenses will pile up and affect your budget. In that case, a loan would ensure you have enough money to pay for your daily expenses. Secondly, you can take a loan to build your credit score. Some financial institutions will grant you a personal loan if you have a steady income. Repaying it on time will allow you to qualify for larger loans when you need them.
What loan options do you have? Depending on the sum you need, how much you earn, as well as other factors, you can choose from 3 main options:
- Credit unions
- Payday lenders
Banks will require a credit history and will frown upon any existing debt. If you have a credit history and your score ranges from 610 to 640, you could be eligible. Only a handful of banks will provide private student loans, and they will consider requests for amounts from $2,000, depending on the institution. With collateral or a co-signer, you can get lower interest. You will pay off your loan in fixed monthly installments. Any delay will negatively affect your credit score.
Loans from Credit Unions
Like banks, a credit union will analyze your credit history and income to check if you qualify. There is an extra step: you first have to become a member to be eligible for a loan. If you have a local credit union affiliated with your college, visit them and discuss a potential membership. Under federal regulations, most credit unions cannot go above an 18% interest rate.
If you have no credit or your score is low, and you are in desperate need of money, you can try a short-term payday loan. The qualification criteria allow for easier approval, even with a poor credit score. The interest is a fixed fee added to every $100 borrowed, with an average of $20. While payday loans have to be repaid shortly and provide smaller loans, the APR for such a loan is less convenient than the previous two options. There is no universal place to get a loan as a student. If you can access government programs and resources, do that. In all other cases, choose your lender based on what matters most to you. Use your loans wisely and invest in your education. Check the page for participants to find out what you need to attend the next NAACL event. Every year, we meet you halfway by granting generous discounts for students and ensure the program is worth the investment.