Direct to Student Private Loan
Private loans come in many shapes and sizes, one of which being the Direct to Student Private Loan. As the name implies, this type of private student loan sends the borrowed funds directly to the student instead of the school's financial aid office for processing.
In recent years, this format has largely disappeared in the banking world due to increased credit risk among young borrowers and the unstable economy. Banks feel that sending the funds directly to the school is a safer practice because it requires each institution to certify the loan amount and prevent students from applying for way more money than they need or are capable of repaying.
Alternatives to Direct to Student Private Loans
Yes. The more popular version of this loan product is what is called a "certified" private student loan. In a nutshell, this type of loan evades the risk mentioned above and requires your school to approve the borrowing amount before disbursing the funds directly to your college.
To learn more about these types of loans, check out the private student loan overview on PrivateStudentLoans.com. An excellent tool for comparing private loans is also available.
