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Overview
About Short Term Education LoansThe majority of student loans are for very long periods of time. However, for students who find themselves in an emergency in regards to being able to pay their tuition, they may find that they need short-term financing to help cover a gap that might otherwise result in having their entire educational career derailed. Luckily, some lenders have stepped in to fill the gap, although such loans can be costly.
Warning
Student loans are governed by a separate set of regulations relative to most other types of loan. Bankruptcy does not settle student loans. Entering default on a student loan can wreck a credit rating quickly, and it is more difficult to negotiate down and settle than an ordinary personal loan. These short-term loans are often subject to many stipulations, restrictions and fees that are not present in loans with longer terms.
Considerations
There are many potential sources for short-term tuition financing. The most common available to most students comes from their university itself. This is often also the most convenient, and some institutions have special agreements with financial institutions to provide such financing at reduced rates. Contact your student financial aid office first for information on short-term financing before going to the open market.
Function
Student loans should be used primarily to finance tuition, books and other college-related expenses. Students should only turn to short-term student financing in a true crisis, such as the incapacitation of one or both parents or that of the student herself. Sudden unemployment or some other such issue may also make the financing necessary. As short-term student financing directly available from financial institutions is relatively rare, turning to a personal loan may be necessary instead.
Features
One good potential alternative is peer-to-peer student lending. Some more generalized peer-to-peer lending websites like Prosper are potential sources of short term financing. Others such as Fynanz and GreenNote specialize in providing education loans to students in need. These websites often charge relatively low interest, and it can be easier to get approved for small loans than from banks, which generally are looking for borrowers that will borrow more at once.
Potential
To increase the chances of being approved for short-term financing, it often helps students to get a co-signer for the loan, such as a parent, friend or family member with an established credit history and stable income. This will reduce the risk to the student, but the person co-signing will find himself liable for the loan if the student does not follow through on her obligations to the lender--and it will damage both of their credit ratings if that happens.
