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.
What Makes a Private Student Loan Different?
All private student loans require a credit check for the primary borrower. Generally, a co-signer 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.
A private student loan can cover up to the full cost of your education, and can be used for any education related expenses. You can apply for a private loan at anytime during the school year.
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 Stafford|
|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||Fixed at 6.8% (3.4% for subsidized undergraduate borrowers)|
|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 true 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.