Now that we are in peak borrowing season for private student loans, our customer service inbox is overflowing with your questions. One question in particular keeps popping up so we’re going to address it quickly here and try to save some postage.
A recent email asked, “My daughter needs to borrow $10,000 this year to finance her costs. Does she request $10,000 for just this year or $40,000 for all 4 years she will be in school?”
It might seem convenient or even cost-effective due to current low interest rates to finance an entire education up front. However, the student would still be accruing or paying interest on the full amount borrowed while in school. As you can imagine, the interest charges on $40,000 are much higher than on $10,000. Let’s take a quick look at how eligibility is determined to see how the borrowing process works.