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UPDATED: Jan 13, 2012
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When the government doesn’t provide student loans to an applicant, or when the federally-backed loans aren’t enough to satisfy the high costs associated with college today, private student loans are available. A private student loan refer to a type of financing available to students pursuing a higher education at an approved university or institution.
[loansform]Since private student loans are administered by private corporations or investors, they typically carry higher percentage rates than federal forms of financing. As a result, students should use this kind of financing as a supplement to government-backed loans. In addition to using a private loan as a supplement, students should also apply for certain scholarships and grants to help fund their education.
Students can receive some breaks though, as lenders realize their interest rates are high—particularly for a portion of society who is likely unemployed, as pupils often don’t have time to work while studying. As a result, many lenders offer certain breaks, discounts, or bonuses to students who demonstrate consistent and on-time payments.
Interest rate deductions may also be acquired if a pupil provides a co-signer.
Most private student loans are backed by the financial services company called Sallie Mae. Sallie Mae was originally a government-sponsored entity that was established in 1972, but as of 1997, the company began privatizing its services. Since its creation, it has backed more than 31 million students with loans.