Private Student Loans

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Being a student and financial hardship tend to go hand in hand, it’s something we accept and understand before we even begin our course. Unless we’ve got wealthy parents, significant savings or a well-paid part time job, living on a shoestring budget is something we’re going to need to prepare ourselves for sooner or later.

The good news is we’re often entitled to a grant from the government as well as a loan from services like Student Finance England. This is especially true if we’re going to university for the first time. These student loans are the most common. They are means tested and generally paid into a student’s bank account at the start of each term. But even with these loans, a part time job and support from parents, many students still find it hard to make ends meet.

Additional support can be found from private lenders, many who tailor their loan products specifically to appeal to students. Like a student loan from the government, these loans have preferential rates and can be paid back at a later date once the borrower is working full time and ideally earning a decent wage.

Who can apply for private student loans?

Only those who are officially listed as being in full time education can apply for any form of student loan, and that applies to private loans too. These student loans, although offered by private lenders and not the government, share many similarities with government funded student loans.

If they were on offer to the general public, they would be incredibly popular! That’s because they are seen as being far more lenient than traditional borrowing. Private student loans are not only more flexible in terms of repayment, but their interest rates are far lower than any other form of loan. Even those that are considered low APR by normal standards.

Simply put, students have access to the best loans on offer anywhere. Period. These loans are created with students in mind, and lenders understand that the average student cannot afford to pay back a traditional loan. At least not in the same way someone who works full time can.

This is why if you’re a student who’s short of cash – you should consider a private student loan on top of your government loan. Once your studies end, you’ll never have access to such low rates and agreeable lenders again. Take advantage of this while you can.

What about my credit rating?

Your credit rating isn’t that important when it comes to applying for a student loan. It doesn’t factor into the decision of state funded loans at all. But when it comes to private student loans an individual’s credit rating is factored in somewhat. After all, these are private lenders and they don’t want to lend to anyone who’s considered a risk. But the good news is they are much more lenient than traditional lenders would be and are still likely to approve a loan to a student. Naturally it depends on the situation, but private student loan lenders are used to providing loans to those with a less than stellar credit rating.

Students who are coming to the end of their course may want to consider a private student loan for any future endeavours they may wish to pursue. Borrowing this money now will be cheaper in the long term than waiting and doing it once your studies have ended. If you’re someone who’s already in debt prior to becoming a student, then consider a private student loan to consolidate this debt. Chances are the rates and repayment options will be far more agreeable than they were before.

Defining what a student is

Knowing who counts as a student sounds like a no-brainer but for private lenders of student loans there actually is a strict set of criteria that must be met. Simply taking a creative writing course on a Thursday evening, for example, wouldn’t be enough to qualify for a student loan. Nor would night school or various other classes that take place in your spare time.

To qualify for any form of student loan an individual will need to officially be enrolled in enough hours of education a week so that they cannot feasibly work full time. This means being a full-time student who’s completing a degree, be it undergraduate, post graduate or PHD course. Or any of these courses on a part time basis.

It stands to reason those that those studying part-time may be entitled to less than those in full time education, but not always. This is because those who study on a part time basis are more likely to do so alongside their job. Or at least hold a part time job too. However even full-time students can have a part time job and still be eligible for a private student loan. This shouldn’t really impact what you can borrow. Being classed as a full-time or part-time student is usually enough to qualify.

There are many other forms of education too besides traditional undergraduate degrees, master’s degrees and PHDs too. If you’re studying to be a teacher in the UK you may need to do what’s known as a PGCE, these are recognised qualifications (equivalent to a master’s degree). In fact, many industries have various qualifications that can be studied full or part time. The majority of these are recognised by lenders, and they will class you as a student if you’re undertaking one. But always check with the lender in question.

Even if the course you’re on isn’t considered traditionally academic it’s always worth checking. Some modern apprenticeships and college courses may also be mean you’re classed as a student in the eyes of a lender. Especially if the course is full time. Those doing apprenticeships may be entitled to less though, as they usually earn a wage from their employer too.

A good test is to see what the government class as a student and who is entitled to claim a student loan from them. Normally this is the same criteria that private lenders require.