Private financial aid can include student loans, scholarships, grants, and assistance from friends or family members. In all cases, the financial aid does not come from the government or a lender that works with the government to provide financial assistance to college students. For loans, the interest rates are higher than those on government student loans, and the repayment terms may not be as favorable. Students who need financial aid should apply preferentially for grants and scholarships, then government loans, and finally, private loans.
Students can use private student loans if their aid awards do not meet their needs. The loan disbursements can cover housing, food, books, and other expenses. A number of lenders offer private financial aid, and it is advisable to get a list of recommended lenders from the financial aid office. While students do not have to use these lenders, they may find it helpful to choose from this list, as the university is used to working with them.
Gift aid in the form of grants and scholarships is another option for private financial aid. Some students may qualify for public grants and scholarships like the Pell Grant program in the United States. In addition, many colleges and universities maintain a list of available financial assistance, including alumni grants and scholarships. Students can also search databases to see if there are other forms of gift aid available.
Family assistance can also be useful for some students. Private gifts or loans of money from family members may meet gaps in financial aid awards without forcing a student to apply for more loans. Students who need this kind of private financial aid may want to meet with their parents to discuss it ahead of time. Family members could have stipulations on their grants of money, like a request to study a particular subject or show evidence of progress. If the money is a loan, it is also important to establish a repayment plan.
After students graduate, they may qualify for private financial aid to help them consolidate their student loans. Students with a mix of private and public loans may need two separate consolidations, one through a public lender and one through a private lender. Consolidation can make it easier to repay loans and may help students lock in a lower interest rate. Students with an interest in loan consolidation can get information from their financial aid offices, including lists of lenders and their terms to allow students to start comparing options.