Private Student Loans
An Overview of Private Student Loans
Private student loans, or alternative loans as they are
sometimes referred to, are not part of any federal loan
program. They involve you taking out a loan from a student
lender to help pay for college. They do not have interest
rates that are set by the government (like
Private Loans and Other Financing Options
You typically want to exhaust your other financing options before
taking out private loans. Make sure you've done a
search for scholarships
and taken advantage of
before getting private loans. Private student loans are typically
a better option than paying for college on your credit card, though.
Private Student Loan Limits
In most cases, student lenders will allow you to borrow up
to the cost of attendance minus other financial aid. Some will
allow for expenses like a new computer or study abroad. You will
need to check with the specific lender regarding the loan limits.
As a good rule, you want to minimize the amount of student
loans that you take out. Remember, you will have to pay this
money back at some point.
Private Student Loan Interest Rates
There are no set interest rates for private student loans.
Interest rates may differ from lender to lender. They will
also differ depending on your credit score, your parents' credit
score (if they are a co-signor), and other factors decided upon
by the specific lender. Moreover, these interest rates tend to
be variable interest rates, meaning that they can change over
time, based on changes in certain financial indexes (like the
rate and the
Upfront Fees on Private Student Loans
Unlike federal loans, there are no standardized fee structures for
private loans. The upfront fees may differ from lender to lender.
Your credit history or your parents' credit history may also affect
the upfront fees you are charged.
Borrower Benefits for Private Student Loans
Many lenders will offer rewards or benefits as part of their loan
package. Examples of
include graduation benefits, interest rate
reductions for on-time payments or auto-debiting on your bank
account. It's important that you are realistic about whether you will
actually earn these benefits or rewards. What are the chances you will
make 48 on-time payments in a row? They may be low. What are the chances
you will earn the graduation benefit? We hope the chances are high that
you will get this one. Our
Student Loan Marketplace can help you compare loans
with and without Borrower Benefits.
Applying for a Private Student Loan
You do not need to complete the
to apply for a private student loan. However, we do recommend
that you complete a FAFSA
and take advantage of the federal loan programs (e.g.,
prior to applying for private loans. Many lenders will require that
you have a co-signer on your loan. A co-signer is basically someone
with better credit than you who takes responsibility for paying back
the loan if you are unable to. A co-signer with a good credit history
will typically allow you to get a much better interest rate on your
private loans. For most students, your parents are going to be your co-signers.
Many financial aid offices will provide a Lender List for you to
use as a reference in your search for a lender. The school will also
provide a document explaining how it selected this list. It can often
be a good idea to use this list or to use a
Student Loan Comparison tool
that allows you to investigate a number of lender options and make
an educated decision about which is right for you. You are not required
to use a lender off the school's Lender List. You definitely should do
some research and
compare your student loan options.
Find a Private Student Loan
You can use our Student Loan Marketplace to
find and compare student loans!