Borrowers who have maxed themselves out on federal loans or who are in enrolled in programs that do not qualify, may have to look for other options to get the financing they need for school. If you fall into either one of these categories, fear not! You do have options outside of the federal government (learn more about federal versus private loans for college).
You will need to be discerning in your application process, and should be realistic about the amount of money that is needed to complete your educational program.
Loans Based on Credit
Personal loans for students are generally based on credit rather than income, so prepare accordingly. If you have not checked your credit report, get a free copy from each of the three major credit rating agencies – TransUnion, Experian and Equifax. The three reports may be different from one another, and you never know which one the bank will pull so check your credit report with the three agencies before applying for a loan to see where you stand. If you have little to no credit, look to ways that you can build credit while staying within your budget. It is also recommended that you do not spend more than 20% of the credit available to you (on a $1000 credit line that would equal $200). Paying off small monthly bills each month with your credit card is a good way to demonstrate credit-worthiness, and will help you build credit over time, putting you in a better position to qualify for loans as you show positive credit history.
Don’t Borrow Too Little or Too Much
Speaking of the amount of money that you should borrow, don’t scrape the bottom of the barrel when it comes to paying for tuition and books. You may need money for additional research materials, food, incidentals and comfortable room and board (student loan calculator). Account for all of these things when you calculate just how much money you will need to borrow from your lender.
At the same time, don’t go overboard as you calculate your expenses for school. Keep in mind that you will be responsible for paying back every penny of this loan plus interest. You can usually borrow more under a private loan than you could under a federal loan, but you should keep your estimates realistic but conservative.