Student Line of Credit
Several of the major banks and credit unions have a product called a "student line of credit". With this form of assistance, the financial institution approves a maximum amount of money that the student can borrow. Students then borrow up to this amount as they need the money, paying interest only on the amount they have actually borrowed. They can repay the money at any time, reducing their interest costs. Students make monthly payments only on the interest while in school, and begin to pay the principal sometime (usually six months) after they graduate.
Applicants are usually required to provide evidence of income, collateral, or a co-signer. Contact your financial institution or check their website for more details.
A Student Line of Credit is a good alternative for students who do not qualify for government student aid because of parental or spousal income, or because of personal resources. It can also be a good option for students in relatively short programs, or who need funds for the latter part of their program. The process of obtaining a Student Line of Credit is usually considerably easier and quicker than the process for obtaining government student aid.
A major drawback of the Student Line of Credit is that students pay interest throughout their time in school (with government student aid, this period is interest-free). This can add up to a substantial cost if you borrow money for several years of school.