Using Private Student Loans? Get a Back-up Plan, Too

Increasingly, students find themselves turning to privately issued student loans to pay outstanding balances not covered by financial aid and scholarship awards – but what is a student supposed to do when the student loan is suddenly not available or discontinued across semesters?

In the last year, many private student loan companies have stopped doing business with new borrowers – instead, they’re managing or selling off the loan assets they currently own and moving capital to cover their own liabilities. In quite a few instances, students are left with short warning that their next loan disbursement isn’t in the mail.

So while private student loans were once seen as the backup plan, these days, you’ll need another backup plan to account for all the banks and lenders that are going out of business or suspending new operations!

The classic strategies to reduce college costs hasn’t changed much:

• Try to attend a public school – preferably one that’s local. It may seem lame to live with your parents for a few years while you’re getting started in college, but it would be even lamer than that to be forced to move back in with them after college because you’ve piled on a bunch of debt and the weak economy can’t support you with a nice job.
• Don’t just buy used textbooks, get used textbooks online where you can search around quickly and compare prices from across the globe
• Budget as if some income may vanish.  Jobs are disappearing, loans are disappearing, its not a stretch to imagine that something like this is going to happen to you or someone you know.
• Find free food on campus – there are always a ton of groups and organizations having meetings, and they’ll often lure in new members with the promise of food.

Running out of funding in the middle of your degree is no joke – in a worst case scenario, you may be forced to suspend your pursuit of a degree.  If it seems like this is inevitable, it would also be advisable to get a hold of the school’s grade transfer and re-enrollment possibilities.