Getting Student Loan from Parents

Private student loans, if properly managed, that is, if one keeps up with the repayment responsibilities, will never cause the student borrower any problem. But sometimes, things do not turn out smoothly as one might plan – late payments are committed, monthly dues are missed altogether.

Consequently, the delinquent student borrower will experience a financial disaster, in the form of degraded credit ratings. Bad credit will most likely result in his opportunities for future loans becoming much limited. More importantly, his standing as a debtor becomes tainted if only because of his financial wrongdoings. So, why acquire private college loan in the first place?

While definitely a reliable financial source, private student loan is not the only way to go in settling your educational expenses. Especially if in your self-assessment, you realize your incapacity to repay such loan, then it’s best to look for other possible ways to pay for your college.

I know an effective alternative to private college loan is to borrow money instead from people you know. On top of the list is your family, specifically your parents. More often than not, parents are very much willing to shell out “loans” to their kids for college expenses. Most of the time, money from parents are ready, easy cash. There are no paper works, no need for co-signor, no strict repayment dates and even no repayment itself. Loans from our parents are what can be called “pay-when-able” student loans.

Indeed, parents can be relied upon when it comes to creating money for our education. And even if your “lender” is your parents, it is also advisable that both parties (you and them) draw out terms. Is it pay-when-able or payable every month? What about interest – is it zero per cent (which is most likely the case) or any figure both of you have decided upon? Even if you have parents as lenders, it is best to draw terms and conditions particularly on repayment – this speaks of responsibility on your part.