Private loans help students pay for tuition, supplies, books, room and board, and other expenses related to postsecondary education. Also known as alternative loans, private loans are useful for students and parents who do not get enough funds from government loans or need more lenient repayment and deferment options. Since private loans are granted by private lenders, students do not need to complete and submit federal forms. In order to qualify for private loans, students must meet credit score requirements. Further, students must be enrolled in undergraduate, graduate, or professional programs at participating institutions. They must be half-time students at least, and they must meet the academic requirements. Private student loans cost more than federal loans and offer higher and variable interest rates. Some students and parents are unable to get federal loans because of bad credit history and other reasons. It is always recommended to try to get a federal loan first, like the Federal Stafford Loan or PLUS Loan, and then turn to a private loan only if the federal loan is not granted or does not suffice. Therefore, as a first step, it is advised to fill in and submit a Free Application for Federal Student Aid (FAFSA) and try to get different federal student loans, grants, work study programs, and other forms of financial aid. Private loans should be a last option, since they are more costly. Private loan interest rates are usually based on an index (LIBOR or Prime) and a margin which depends on credit history. The variable interest rates and fees attached to private loans correspond to the student’s or cosigner’s credit score. A poor credit score spells very high interest rates. It is recommended to have a cosigner help you apply to a private loan (even if you are eligible independently); the presence of a cosigner makes the loan less risky to the lender. If you cannot pay, the lender can turn to the cosigner for the payment. Thus, lower interest rates are offered, because the private loan lenders determine the interest rates and fees based on the cosigner’s credit score. Borrowers must be very cautious when dealing with private loans, because lenders do not always provide complete details from the beginning. Some lenders grant a lower interest rate during the time the borrower attends school and during the grace period. However, interest rates often climb up when the borrower enters repayment. Lenders of private loans often wait until the student’s application is in before sharing all the information. Students might be surprised with higher interest rates than initially advertised, because lenders often advertise figures based on ideal credit conditions. Different types of private loans are available. Private loans cover various fields and levels of study. Some are specifically designed for particular fields like medicine, law, and more. Each private loan program is different, because each private lender has different preferences and criteria. If you are considering private loans, make sure you have exhausted all other less costly options and make sure to do tedious research before committing yourself to a program.