Best Private Student Loans - September 2020
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A private student loan can make sense for the right situation. When you pay for your college, you should first fill out a FAFSA and exhaust your federal student loan options. If you still need help paying your way through college that is when you might consider a private student loan.
Remember that private student loans are lended out by private lenders, not the federal government. When you apply for a private student loan you will most likely need a co-signer. Check out the best private student loan lenders below and see which one can offer you the best rate.
3.62% – 14.50%varies on credit
2.73% – 13.01%varies on credit
5.36% - 9.07%varies on credit
4.46% - 9.43%varies on credit
4.72% - 12.19%varies on credit
1.27% - 9.53%varies on credit
3.49% - 12.99%varies on credit
1.24% - 11.98%varies on credit
4.24% - 12.99%varies on credit
1.24% - 12.49%varies on credit
4.25% - 12.35%varies on credit
1.25% - 11.15%varies on credit
5.45% - 9.74%varies on credit
3.52% - 9.50%varies on credit
Learn About Private Student Loans
Gain some clarity with our geeky insight.
What is a private student loan?
A private student loan is a credit-based loan for college. This loan can help students cover the gap between financial aid received and the full cost of attendance. It’s important to know that private student loans are issued by private lending institutions, like banks and credit unions – not the government. When you apply for a private student loan, you will fill out an application and the lender will confirm you meet their criteria (credit score, verification of school registration, etc).
Why do students take out private student loans?
Private student loans are used if you can’t access enough funds to cover your college expenses. Private student loans can help students fill the gap.
What is the difference between a private student loan and a federal student loan?
The difference simply comes down to who is lending you the money. Private student loans are issued to students by a private lending institution like a bank or credit union. Federal student loans are issued by the U.S. Department of Education.
How much money can I borrow with a private student loan?
While it does vary, private lenders have limits on how much students can borrow, but you might be able to borrow more than what you would receive through federal aid.
According to the U.S. Department of Education’s website, the aggregate amount you’re allowed to borrow through federal aid is capped at $57,500 for an undergraduate student. In most cases when you’re applying for a private student loan, you can borrow the entire cost of your education, including living expenses.
How and when do you pay back your private student loan?
There are four common ways to pay back your private student loan:
1. Immediate Repayment of your loan
You can start immediately paying the full monthly payment of the student loan (principal + interest) while you’re in school.
2. Interest-Only Repayment
Interest-only payments can be made while you’re in school. This will pay the interest as you go so it doesn’t accrue and get added to your balance.
3. Partial Interest-Only Payment
A partial interest repayment plan lets you pay a fixed amount (for example – such as $25 or $50 a month). While this amount won’t take care of all the interest you owe, it will keep your loan balance from growing too quickly. Choosing this plan can be a good way to stay on top of your loan and reduce the total amount repaid.
4. Full Deferment
Full deferment will allow you to completely postpone making your student loan payments until graduation. It’s important to remember that interest will accrue during the full deferment period and will be capitalized at the end of it.
What are the advantages of applying for a private student loan with a creditworthy cosigner?
It is rare that a private student loan lender will let you apply on your own. Most students will need to apply with a creditworthy cosigner to meet the lenders eligibility requirements. These requirements usually include a strong credit profile and income. Having a cosigner with a healthy credit score can help you qualify for a lower interest rate.