As if rising tuition bills weren’t bad enough, the cost of taking out a private loan to pay for college is likely to begin climbing, experts say, as fallout from the nationwide credit mess extends its reach into higher education.While the growing scrutiny over mortgages and, to a lesser extent, auto loans has been garnering most of the attention pertaining to credit woes, the ongoing lending turmoil also is impacting private student loans, said John Pearson, a certified financial planner at Shelton-based Barnum Financial Group who specializes in education.

“All these loans are probably going to be a lot harder to get,” he said, something students and parents will start to notice around May or June as they begin to plan how they will pay for college.

“I doubt that many people have thought about this,” Pearson said of credit industry problems’ impact on education loans. “I don’t think there’s a lot of awareness of how this flows over to the student loan side of this at all.”
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If savings, grants, scholarships, and federal loans don’t cover the cost of your education, it’s time to turn to private loans. But young college students can’t qualify for a private loan, can they Wrong! This article addresses this and other myths about student loans that you may run into. I don’t have any collateral, so I can’t get a private loan.

Private loans are usually unsecured, which means no collateral is required. On the downside, this may also mean a higher interest rate.

I don’t have a good credit history or no credit history at all

Since the government doesn’t back private loans, your credit history is a consideration in being approved for a loan. If your credit history is bad or non-existent, you may be subject to a higher interest rate. And remember, you can always get a co-signer. Pay your loan off on time, and soon you will have a good credit history!

I have enough funds for tuition and fees, so I can’t get a private loan

In addition to paying tuition and fees, funds from private loans can be used to cover living expenses, supplies, computers, and other everyday living needs. (more…)