Planning Ahead When Applying for Private Student Loans

June 21, 2011 | posted by Jeff Sheely.

planning-ahead-for-private-student-loansAs you start putting together your financial resources for the fall semester, you may be wondering whether it makes more sense to take out two private student loans (one for each semester) or one loan for the school year. Planning ahead can save you time and avoid the risk of changes that could impact your interest rate or loan amount.

Should you take out one loan to cover the whole school year, or two separate loans?

If you’re planning on attending for the full school year (two semesters), and you need a loan, you should take out one for the school year (with two disbursements), rather than two separate loans.

Things to Consider

  • When you take out one student loan to cover both semesters, it will be disbursed once at the beginning of the fall semester and once at the beginning of the spring semester.
  • Interest does not begin to accrue until the loan is disbursed. For example, interest on the second half of your loan will not begin accruing until the spring semester.
  • If you wait until the spring semester to apply for a second loan, a number of things could change, including the interest rate, available loan products, and your credit score.

The most important thing to remember is that if you know that you are going to be attending school for the full year, you should plan ahead to cover the expenses. Even if you are not sure that you will need the second disbursement, it is better to plan for it now than to risk changes that could affect the overall cost if you learn later that you will need it for the second semester.

Image: Jeroen van Oostrom