Private Student Loan Overview
Private Loan Benefits:
- Borrow up to the true cost of your education
- Fast eSignature process
Private student loan programs are a great college financing option that can help cover additional costs not covered by federal financial aid. A private student loan can be used to pay for normal tuition expenses, but can also cover books, supplies, housing expenses, school fees, transportation, and more.
Private Student Loan Features
Private loans offer a great deal of flexibility for borrowers. Students can choose from a variety of lenders, incentives, and even repayment plans. Here is an overview of what private loans can offer:
- Choice of interest rate type
- Potential interest rate discounts for things like making on-time payments and graduating
- Easy online application and account management
- Funding to cover up to 100% of college costs
- Available year-round
Learn more about the benefits of a private student loan.
Private Student Loans and Credit
All private student loans require a credit check for the primary borrower. Generally, a cosigner is required on the application. Adding a credit worthy cosigner will help increase the chances for approval, and could lower the interest rate on the loan. Private student loan interest rates are variable and based on the Prime or LIBOR index plus a margin for borrower credit.
Private vs. Federal Loans
The chart below illustrates the primary similarities and differences between federal and private student loans. We always recommend that borrowers exhaust their federal aid before taking out a private loan.
|Private Student Loans||Federal|
|FAFSA required||In some cases||Yes|
|Yearly Borrowing Amounts||Up to the cost of education||Capped by grade level and status of the student|
|Interest rate||Prime or LIBOR plus or minus a margin, based on credit evaluation||
Stafford Loans - Fixed at 6.8% (3.4% for subsidized undergraduate borrowers)
PLUS Loans - Fixed at 7.9%
|Disbursement||Check sent directly to your school||Check sent directly to your school|
|Deferment||No payments until after graduation||No payments until after graduation|
|Able to Consolidate||Yes||Yes|
Private Student Loans Fill the Gap
We always recommend that borrowers maximize their federal aid first. However, in most cases there is a substantial amount of unmet financial need even after federal aid is exhausted. Private student loans are a smart way to help fill that gap and pay for the full cost of an education.
Private student loans have great benefits:
- Up to 100% of your cost of attendance minus other aid
- No payments until after graduation
Learn more about the hidden costs of college and how to fill the gap in your financial aid package.