It is important to understand the difference between federal and private loans when you need to finance your education. Federal student loans are provided by the government and should be “maxed out” before you commit to private loans, which are provided by financial institutions. A private student loan should only be used when you cannot qualify for other types of financial aid.
There are numerous differences between private and federal student loans. For example, a federal loan offers flexible repayment options, fixed interest rates, the ability to postpone payments, a six month grace period and forgiveness options if you qualify. A private student loan may have these options, but it is not guaranteed.
Most private lenders require a co-signor on the loan, especially to obtain a lower interest rate. A co-signor is somebody who agrees to be obligated to repay the loan with you. Typically, a co-signor is a parent or other relative, which can impose a financial burden on those you love.
Many private lenders apply a variable interest rate to student loans, which means your rate can increase over time. In other words, your payments can continue to increase as time passes, which makes repaying your loan more difficult.
Finally, the collection methods used by private lenders are often aggressive. A private lender must file a lawsuit against you before commencing any collection actions, and most do not offer repayment options to help when you are struggling financially.
If you have private loans and you are struggling to make your payments, it is important to contact us as soon as possible. We can try to negotiate with your private lender before you go into default or we can help you defend a collection lawsuit.
The “defender of the little guy,” DeLadurantey Law Office, LLC. handles student loan debt and bankruptcy matters (Chapter 7 and Chapter 13) in Milwaukee, South Milwaukee, West Milwaukee, and Milwaukee County, including the municipalities of Bayside, Brown Deer, Cudahy, Fox Point, Franklin, Glendale, Greendale, Greenfield, Hales Corners, Oak Creek, River Hills, Shorewood, St. Francis, Wauwatosa, West Allis, and Whitefish Bay. The firm also can handle your debt negotiations, debt relief, and mortgage loan modifications. Contact DeLadurantey Law Office, LLC by phone: (414) 377-0518. Like us on Facebook.