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Information on using private student loan for college expenses

Can private student loans cover bills such as a car payment and car insurance?

If you take out a private student loan for college and intend to 'live off your student loan money', can the student loan cover bills such as a car payment and car insurance?

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Bill's Answer
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I am glad to report that the answer to your question is "Yes!"

I can also offer you the advice to consolidate any existing student loans. This could dramatically lower your monthly payment. I recommend that you shop for a student loan consolidation loan, comparing rates and terms from various lenders.

When most people think of student loans, they think of federally insured student loan programs, such as Stafford and Perkins loans. For many students, federally insured student loans do not provide enough money to cover the cost of tuition and books, not to mention the other expenses associated with a college education, such as food, housing, and other necessary living expenses. Luckily, there are additional loan resources available to students in need of supplemental funds to finance their college education.

These loans programs, called "private student loans," since they are not guaranteed by the federal government, can offer students significantly more money than their federally insured counterparts. Many private student loans allow students to borrow as much as $40,000 per year. Like federally insured loans, most private loans also defer repayment of the loan until you graduate from school, though unlike federal loans, private loans accumulate interest during the deferment period.

The cost of private student loans can vary greatly depending on your lender, so when shopping for a new loan, you should contact various lenders to discuss the loan terms available. You can compare various private student programs at Finaid.org

Unlike federally insured loans, which do not consider your credit history, private lenders will review your credit report, and you must meet the lender's minimum credit guidelines to qualify for a loan. In addition, the interest rate the lender charges you will be based primarily on your credit score. So, if your credit is less than perfect, a private student loan could be an expensive way to fund your college education. If necessary, you could try to find a co-signor with good credit to help you obtain a lower interest rate.

I encourage you to visit the Bills.com Student Loan Information page, where you can read about various loan programs available to students. I hope that the information I have provided helps your Find. Learn. Save.

Best,

Bill

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