The idea behind private student loans (also referred to “alternative” student loans) is fairly simple. Private loans are loans that are administered with no government intervention. A private student loan is essentially a contract struck between the individual borrower (in this case, a student)/co-borrower and his or her lending institution, with all loan components -- the granted loan amount, the interest rate, loan term, repayment options -- offered by the lender.
When it comes to financing an undergraduate or graduate education, private student loans are usually viewed as a “last resort” of loan funding to fill the outstanding funding gap. Only after you have obtained the highest possible amount of grants, scholarships, work-study allowances, and federal loans you are eligible for should you consider applying for a private student loan. Once you have determined that you need a private loan, you should perform in-depth research to locate the best loan to fit your needs. Private loans vary quite a bit so read the fine print to ensure you select a loan that fulfills your funding gap and your future financial plans. Despite this, the number of nationwide private student loan borrowers continues to grow every year, with some studies predicting that the number of private student loan borrowers will eclipse the number of federal student loan borrowers within the decade. Private student loans can usually be issued rather quickly, since there is no need to submit additional forms to the federal guarantors or the government.
Private student loans have their downsides, too. As things stand today, most private student loans are approved only after a thorough review of the borrower’s credit history. Of course, many if not most undergraduate and students have not had the time to build up their credit. As a result, many private student loans require a credit worthy cosigner or co-borrower (usually a parent or another relative) to vouch for the borrower in case he or she can no longer make the loan payments. Borrowers with non-existent/weak credit and no co-signer /co-borrower are likely to be locked out of the best private loans.
Another important consideration with private student loans is that they usually come at higher interest rates. Unlike subsidized government loans, the interest rates on many private student loans are variable and subject to the fluctuating market, and therefore subject to change -- it can go up one month, down another.
The way People Capital sees it, there’s a better way of requesting /applying for Private student loans. Using our Human Capital Score™, which takes into account a student’s GPA, standardized test scores, choice of college, and other relevant factors when producing a future income prediction, People Capital is able to reveal far more about a student’s true risk assessment than a standard credit-history check. It is People Capital’s innovative approach to student lending that is rapidly pushing this elite peer-to-peer lender to the forefront of the industry.
For more information on the People Capital p2p lending platform, please click here..