There is no doubt that federal students loans offer much better benefits than private student loans, but they still succeed in helping students pay for schooling. What happens when your school days are over and you receive your first loan bill? You are faced with the decision of either ignoring the bill or paying the bill. The best penalty-free option would be to repay the loan as soon as possible.
Why as soon as possible? Payments cannot be deferred even if you plan on going back to school. There is no application for forgiveness on a private loan consolidation. If you are experience economic hardship, you still cannot forbear the payments. These loans have variable rates and can be tied up with volatile indexes. For example, if the rates are tied with the Prime Rate, then they can jump up to 13%.
If you are still a student, consider other alternatives for paying for school. There are plenty of student jobs available with flexible hours. If you are a planning on becoming or you are already a graduate school student, you can search for scholarships like graduate school scholarships for women or graduate school scholarships for engineers. There are also fellowships and assistantships for graduate students. Even if your private student loans cover all of your expenses, don’t let the opportunity for receiving scholarships as simple as ‘graduate school scholarships for women’ pass you by. You can still use that extra money to begin paying back the loans before you even finish school. That is the best way to handle private student loans. The sooner your loans are paid off, the better your debt situation will be.