Well, the day has come, in my college career. Where Im being force to take out student loans in order to continue pay for my education. After 3 years at a community college, Im ready to transfer to a university, Rutgers University. But I can not longer afford to pay out of pocket. And as i suspected, my parents made a large amount of money which disqualified me from any type of financial aid. So, in the coming days I will be going to banks and other financial institutions to apply for student loans. I was wondering if anyone out there has any general tips, that could be useful. Something I should be careful about?
My plan is to go to as many banks as possible and see which one offers me the best interest rates.
How are you going to get a private loan without an established credit history and a full time job? Your parents or someone with these things will need to consign. No bank in their right mind would loan you anything.
Actually, I have a long credit history which involves several credit cards, retail credit cards, and utility bills on my name. Not once I been late on a payment. My oldest credit card goes as back as my high school years. My current FICO credit score is 731. And over the years that I been in community college I have been working full time, until two semesters ago, when I was forced to reduce my hours because of the overload of school work.
That’s good. However, it’s misleading to emphasize credit history. The concern for lenders isn’t your character or integrity but your ability to make the payments. Because you had to reduce your hours (which is a reasonable choice, don’t get me wrong) you may not have sufficient income on your own to qualify for student loans on your own. You may need to secure a cosigner (a parent) with decent/good credit on your own. The reason why this is needed here (you may not have needed a cosigner before) is because a student loan is a huge unsecured debt – unlike a utility payment or a car note, there’s no way for the lender to get their money back. It’s not like they can repossess your brain.
That being said, since your parents are high income they may also have good credit scores which will be good for you in seeking competitive rates. You or your parents probably have a preexisting relationship with a bank which you can use as a starting point.
(It’s also worthwhile, as other posters have mentioned, for your parents to look at borrowing the money from the federal government. The interest rate is OK but there are other benefits such as the loan being forgiven if either you or your parents die.)