Even if your parents have set up a college fund for you or you have managed to set aside some savings yourself, there is still a possibility that you will come short of cash while studying. Being a student often means doing it hard for a few years, studying full time and trying to make ends meet leave many students cash poor or even broke.
If you are one of those students who are struggling financially, you might want to consider a private student loan. Yes, some private student loans have higher interest rates compared to those student loans offered by the government but the good news is that it is often easier to get private student loans than those student loans that are backed by government funds.
Setting out a Budget
Before you get a private students loan, you need to take a closer look into your financial status and find out how much you actually need. As a cardinal rule, you should never borrow more money than what you actually need. Always remember that a student loan needs to be repaid at a given time so if you don’t want to end up with more debts than you can handle, you will need to learn to manage your finances.
Set out a budget of how much money you need for your studies, list the things that you need for the semester or school year in one column and the amount of money that you will need for these things in another column.
Loans are generally credit based, here are a few ideas for everyday expenses, housing, off campus housing, computers, cars, transportation, books and other related expenses such as travel and study abroad.
After writing everything that you need for the semester or school year, you need to draw a list of your sources of income. If you have a job, write down the income that you will generate from that job. You would also take into consideration any money you have in your college fund, if any.
This is a simple budget and won’t take long to do, however it will give you the big picture and hard facts of how much private students loan is required.
The difference between your income and expense is the amount of money that you need to raise from your graduate loans. At this point you will need to add in a loan contingency of at least 10 to 15% to cover inflation and any unexpected cost that are likely to occur. Having this blue-print for your finances during your studies will minimize your private student loan and hopefully give a sound financial base during your studies.