The listings that appear on this page are from companies from which this
website receives compensation, which may impact how, where and in what
order products appear. This table does not include all companies or all
available products. Bankrate does not endorse or recommend any companies.
|
Filters
BANKRATE'S MOST VISITED PARTNER
Competitive rates, no origination fees, and flexible repayment options.
The Bankrate scoring system evaluates lenders' affordability, availability and customer experience based on 11 data points selected by our editorial team.
An annual percentage rate (APR) represents the interest and fees you'll pay on top of your initial amount every month. A fixed rate will not change during your repayment period.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
4.6
Bankrate Score
Fixed APR From
4.50-
14.83%
with AutoPay
Loan Amount
Cost of attendance minus aid
Term: 10-15 yr
Min. Credit
Not disclosed
Competitive variable and fixed interest rates
No origination fee or prepayment penalty
Interest, $25 Fixed, or Deferred Repayment Options
Rates: Lowest rates shown include the auto debit discount. Fixed - 4.50% APR-14.83% APR and Variable - 5.99%-16.33% APR. Additional information regarding the auto discount:
Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 4/25/2023. No payment penalty: Although we do not charge a penalty or fee if you prepay your loan; any prepayment will be applied as outlined in your promissory note- first Unpaid Fees and costs, then to Unpaid interest, then to Current Principal.
Terms: Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years.
Variable Rate: 5.99% to 16.33% APR (with autopay)
Fixed Rate: 4.50% to 14.83% APR (with autopay)
Effective Date: 5/25/2023
Apply on partner site
4.7
Bankrate Score
Fixed APR From
4.24-
13.55%
with AutoPay
Loan Amount
$1k- $500K
Term: 5-15 yr
Min. Credit
640
Easy online application!
No origination fees, late fees, and no insufficient fund fees. Period
Flexible repayment options to help you find the right loan for you
0.25% discount when you set up autopay*
0.125% discount for returning borrowers and families with multiple children in college
UNDERGRADUATE LOANS: Fixed rates from 4.24% to 13.55% annual percentage rate ("APR") (with autopay), variable rates from 5.24% to 12.82% APR (with autopay). GRADUATE LOANS: Fixed rates from 5.00% to 13.35% APR (with autopay), variable rates from 5.74% to 12.82% APR (with autopay). PARENT LOANS: Fixed rates from 6.25% to 13.73% APR (with autopay), variable rates from 6.07% to 12.88% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 05/31/2023.
Apply on partner site
4.1
Bankrate Score
Fixed APR From
3.65-
16.18%
with AutoPay
Loan Amount
$1k- $400K
Term: 5-20 yr
Min. Credit
640
Compare real, pre-qualified rates from up to 10 lenders in under 2 minutes
No hidden fees, origination fees or prepayment penalties
Checking your rates won't affect your credit score
Variable rates will fluctuate over the term of the borrower's loan with changes in the LIBOR rate. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Rates are subject to change at any time without notice. Your actual rate may be different from the rates advertised and/or shown above and will be based on factors such as the term of your loan, your financial history (including your cosigner’s (if any) financial history) and the degree you are in the process of achieving or have achieved. While not always the case, lower rates typically require creditworthy applicants with creditworthy co-signers, graduate degrees, and shorter repayment terms (terms vary by lender and can range from 5-20 years) and include loyalty and Automatic Payment discounts, where applicable. Loyalty and Automatic Payment discount requirements as well as Lender terms and conditions will vary by lender and therefore, reading each lender’s disclosures is important. Additionally, lenders may have loan minimum and maximum requirements, degree requirements, educational institution requirements, citizenship and residency requirements as well as other lender-specific requirements.
Apply on partner site
4.3
Bankrate Score
Fixed APR From
4.44-
15.32%
with AutoPay
Loan Amount
$1k- $500K
Term: 5-20 yr
Min. Credit
680
Competitive fixed and variable rates starting at 4.49%*
Four different repayment options
Choice of loan terms (5, 8, 10, and 15 years)*
No application, origination or disbursement fees
Borrow up to 100% of your school's cost of attendance*
*College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 06/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
Apply on partner site
INCOME BASED REPAYMENT
Income-Based Repayment (IBR) is a student loan repayment program that regulates the monthly repayment amounts based on a percentage of one's gross earned income for a set period of time. IBRs are an alternative to traditional private student loans.
Income Based Repayment - No Cosigner Required
Get approved in minutes. Pre-qualify without affecting your credit score.
No cosigner required
Get approved in minutes
Pre-qualify without affecting your credit score
Income-based repayment with built-in protections, like deferred payments if you lose your job
No in-school payments. Monthly payments only begin when you land a job grossing at least $30,000 yearly.
Never pay more than the maximum payment cap.
Edly Student IBR Loans are unsecured personal student loans originated by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.
Loans from $5,000 - $20,000
Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
Payments deferred for the first 12 months during final year of education.
After which, $270 Monthly payment for 12 months.
Then $379 Monthly payment for 44 months.
Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.
About this example
The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.
Apply on partner site
4.5
Bankrate Score
Fixed APR From
5.74-
14.90%
with AutoPay
Loan Amount
$1k- $350K
Term: 5-15 yr
Min. Credit
680
Lower rates based on your future potential and full financial profile, not just your FICO score
Flexible terms that let you pick your exact monthly payment
Lifetime service provided in-house. Unlike other lenders, we will never pass you off to third-party servicers
No fees for origination, prepayment, or loan disbursement
Two-minute rate check with no obligation at www.earnest.com
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.70% APR to 15.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.40% APR to 16.67% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
Apply on partner site
4.0
Bankrate Score
Fixed APR From
4.89-
10.39%
with AutoPay
Loan Amount
$1k- $500K
Term: 5-20 yr
Min. Credit
660
2-Minute rate check with no impact on your credit score
No origination fees or prepayment penalties
Network of 300+ community lenders means higher chances for approval and lower rates
Available for private and federal, undergraduate and grad school student loans
0.25% Interest Rate Reduction with automatic payments
One of the largest unemployment protection offers in the market; up to 18 months
Cosigner release available after 12 monthly payments
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender's credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender's eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
Apply on partner site
BEST WITH CO-SIGNER
Adding a co-signer increases loan approval likelihood and could help you borrow more money or get a lower interest rate – meaning lower monthly payments & less interest paid over the life of the loan.
4.0
Bankrate Score
Fixed APR From
4.44-
11.94%
with AutoPay
Loan Amount
$1k- $225K
Term: 5-15 yr
Min. Credit
640
With the most options of any lender, we'll help you find a great way to pay for college
No application, origination or disbursement fees
Multi-year approval provides a simple way to secure funding for additional years in school†
Interest rate discounts available.
Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of June 1, 2023, the 30-day average SOFR index is 4.99%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
Apply on partner site
4.5
Bankrate Score
Fixed APR From
4.99-
11.44%
with AutoPay
Loan Amount
$1k- $50K
Term: 5-15 yr
Min. Credit
Not disclosed
No application or origination fees
Choose a fixed or variable rate
5,10, or 15-year repayment term
Displayed rates are for well-qualified applicants who choose the immediate repayment option at a 5-year term
Rates include 0.50% automated payment discount
Important Disclosures
PNC Solution Loans are subject to credit approval. Certain restrictions and conditions apply. PNC reserves the right to modify or discontinue the terms of these program at any time. You are encouraged to explore all scholarship, grant and federal borrowing options before applying for a private loan. A cosigner is typically required for undergraduate students; a creditworthy cosigner is required for 17-year old students.
Annual Percentage Rates (APRs): APRs include a 0.50% interest rate discount for automated payments and may vary by repayment term and other factors (refer to additional details below). Rates are for the immediate repayment option, effective as of May 1, 2023 and are subject to change at any time.
Undergraduate Fixed APRs range 4.99% to 10.24% for a 5-year, 5.79% to 11.04% for a 10-year and 6.19% to 11.44% for a 15-year term. Undergraduate Variable APRs range 5.34% to 10.59% for a 5-year, 6.14% to 11.39% for a 10-year and 6.54% to 11.79% for a 15-year term.
Graduate Fixed APRs range 4.74% to 9.99% for a 5-year, 5.54% to 10.79% for a 10-year and 5.94% to 11.19% for a 15-year term. Graduate Variable APRs range 5.09% to 10.34% for a 5-year, 5.89% to 11.14% for a 10-year and 6.29% to 11.54% for a 15-year term.
The lowest APR is available to well-qualified applicants. Your actual APR will be based on your credit qualifications, loan program, interest rate option, repayment term, repayment option and whether you elect the automated payment feature.
NOTE: The credit score ranges utilized to define “Excellent”, “Good”, “Fair” and “Needs Work” in the Credit Score” drop down option are established by Bankrate.Com as a guideline. Standards for rating credit scores and associated available rates may vary by lender.
Fixed APRs: Fixed rates are based on the creditworthiness of the borrower and cosigner, if any.
Variable APRs: Variable rates are based on the Prime Rate index plus a margin depending on the creditworthiness of the borrower and cosigner, if any. The Prime index, adjusted monthly, is equal to the Prime Rate as published in the “Money Rates” section of The Wall Street Journal ‘(Eastern Edition)’ on the first business day of the immediately preceding calendar month. The Prime index is currently 8.00%. If the index increases or decreases, your rate will increase or decrease accordingly. The rate will not exceed 18%.
Loan Payment Examples: Estimated loan payment examples assume 30 days to first payment and are for the immediate repayment option. Payments vary for other rates, repayment terms and repayment options. For the fixed rate loan, the monthly payment will remain fixed for the term of the loan. For the variable-rate loan, the monthly payment may increase or decrease if the interest rate increases or decreases.
Undergraduate Loan Payment Examples: The monthly payment per $10,000 borrowed at a fixed-rate range of 5.79% APR to 11.04% APR for 10 years means you would make 120 payments that may range from $110.23 to $138.60. The monthly payment per $10,000 borrowed at a variable-rate range 6.14% APR to 11.39% APR for 10 years means you would make 120 payments that may range from $112.01 to $140.62.
Graduate Loan Payment Examples: The monthly payment per $10,000 borrowed at a fixed-rate range of 5.54% APR to 10.79% APR for 10 years means you would make 120 payments that may range from $108.97 to $137.17. The monthly payment per $10,000 borrowed at a variable-rate range of 5.89% APR to 11.14% APR for 10 years means you would make 120 payments that may range from $110.74 to $139.18.
Automated Payment Discount: During repayment, an interest rate discount of 0.50% is available for automated payments. Borrower must be making scheduled payments that include both principal and interest. Interest-only payments do not qualify for the 0.50% interest rate discount. The rate discount will be applied at the time automated payment is established. If automated payment is discontinued at any time, the discount will be removed and the rate will increase by 0.50%.
Cosigner Release: Requires that the borrower has made at least forty-eight (48) consecutive timely payments of principal and interest with no periods of interruption within that 48-month timeframe. To qualify, the borrower must submit a request, meet the consecutive, timely payment requirements, provide proof of income and pass a credit check.
Repayment Options: Three repayment options are available - Immediate repayment of principal & interest, interest-only payments while in school and full deferment of principal & interest until six months after graduating or ceasing to be enrolled at least half-time in school. Interest will continue to accrue during periods of deferment. You will receive quarterly interest statements during this deferment period. Paying the interest as it accrues each quarter will save you money over the repayment term of the loan because any accrued interest that you do not pay will be added to the principal balance at the end of the deferment period.
Loan Types: PNC offers Student Loans for Undergraduates, Graduates, Health Professions, Residency and Bar Study.
Apply on partner site
4.2
Bankrate Score
Fixed APR From
4.48-
12.29%
Loan Amount
$1k- $500K
Term: 5-15 yr
Min. Credit
680
Prequalify to estimate your rate without affecting your credit score,Submit online application in minutes,No application fees, origination fees, or prepayment penalties,Low rates and flexible repayment terms to fit your needs and goals,Student Loan Advisor to guide you through the application process
The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
Apply on partner site
4.3
Bankrate Score
Fixed APR From
4.62-
15.91%
Loan Amount
$2k- $200K
Term: 5-15 yr
Min. Credit
Not disclosed
No cosigner required, ever.
No origination fees. No application fees. No late payment fees. No prepayment penalties.
0.25%-1.00% autopay discounts available
Check rate without impacting your credit
Updated disclosure: Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 5/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
Secure a great loan in 3 easy steps
1
Answer a few questions
Provide basic details about yourself and what you're looking for in a student loan to get matched with customized rates in two minutes or less.
2
Compare your offers
Shop with top student loan lenders and choose the APR, repayment term and loan amount that best fit your budget.
3
Lock in your rate
Finalize your loan details with the lender of your choosing and lock in your rate and terms. Once you’re approved, your lender will reach out with details about how your loan will be disbursed.
Types of student loans
Federal student loans are the best loan option for most college students. These loans are relatively inexpensive and do not require a credit check, meaning all students come in on equal footing. There are a few types of federal loans:
Direct Subsidized Loans: With these loans, students with financial need can have their student loan interest paid by the federal government while they’re in school at least half time, in the six-month grace period after leaving school or in deferment. These loans are available only to undergraduate students.
Direct Unsubsidized Loans: Available to undergraduate, graduate and professional students, these federal loans don’t come with a government subsidy, meaning you are responsible for paying all interest.
Direct PLUS Loans: Parents, as well as graduate and professional students, can apply for these loans. They offer higher loan amounts than Direct Unsubsidized Loans but also charge higher interest rates. These are the only federal loans parents can get.
After exploring federal student loan options, undergraduate students have the option to pursue private student loans as well. These loans do set rates based on credit score and income, so undergraduate students may have trouble qualifying without a co-signer. However, there are lenders that offer student loans without a co-signer or student loans for borrowers with bad credit.
Private student loans are also the only option for borrowers who are not a U.S. citizen or permanent resident. Several lenders offer student loans for international students, though these students will likely need a co-signer who is a U.S. citizen.
Borrowers who have loans with high interest rates may consider refinancing, which is the process of taking out a new loan to replace old ones. Lenders that refinance student loans will use the borrower's credit score, income and remaining loan amount to determine the new interest rate, so it's usually best to refinance once you've had the time to establish a good credit history. In many cases, refinancing is also not the best choice for federal student loans, which would become private loans through the process of refinancing — meaning no more options for income-driven repayment, loan forgiveness and more.
Private vs. federal student loans
The two main types of student loans are private and federal loans. While both serve the same function, there are some significant differences students should keep in mind.
Eligibility: Federal student loans are generally available to any U.S. citizen or permanent resident who needs them. Only Direct PLUS Loans, which are available to parents, graduate students and professional students, require a credit check. Even then, there’s no minimum credit score requirement you need to meet. In contrast, private student loan companies require a credit check, which may make it challenging for most students to qualify. On the other hand, some private lenders offer loans to international students.
Interest rates: Private lenders offer a range of interest rates, which can be fixed or variable. If you apply and get approved, your interest rate will depend on your credit history, income, other debts and more. Federal student loan interest rates, on the other hand, are standardized, which means that for each type of loan, every borrower receives the same rate. The federal government sets federal loan rates once a year, and those rates are always fixed.
Loan limits: Both the federal government and private student loan lenders have caps on how much you can borrow. However, these limits can vary by lender and loan type, so it’s important to double-check before you apply to make sure you can get what you need.
Features: Federal student loan borrowers get access to several benefits that can help with their repayment plan. These features include loan forgiveness programs, income-driven repayment plans and forbearance and deferment options. Private lenders may offer forbearance and deferment, but the terms may not be as generous. Also, most private lenders don’t provide income-driven repayment plans, and none of them offer loan forgiveness.
Repayment plans: Private student loan repayment plans can vary depending on which lender you choose. They’ll typically offer the chance to defer your payments until you’re done with school, but you may also have the chance to start making full payments when the loan is disbursed or make interest-only payments until you leave school. Repayment terms can range from five to 25 years. With federal loans, the standard repayment plan is 10 years. However, you have the option to extend your term to up to 30 years.
What to know about student loan interest rates
Student loan interest rates represent the cost of borrowing money to pay for school. They’re calculated as a percentage, which is applied to the principal amount of your loan. As a result, the amount of interest you pay with each payment will go down over time as you pay more of your actual loan amount.
Student loan interest rates come in two forms: fixed and variable. A fixed interest rate will remain the same for the life of your loan, which provides some certainty. With variable interest rates, your rate can change over time, depending on the current market interest rates.
Variable rates tend to start lower than fixed rates; however, because you take on the risk of interest rates rising in the future, they’re generally best if you plan to pay off your loans quickly.
As you consider whether to borrow money to pay for college, calculate your student loan interest to get an idea of how much you’ll end up paying. Depending on how much you borrow and what your repayment term looks like, it could amount to thousands or even tens of thousands of dollars.
How do I get a private student loan?
It’s relatively easy to get federal student loans. Simply fill out the Free Application for Federal Student Aid (FAFSA), and your school will use that information to determine how much money you need and provide federal loans as an option. With Direct PLUS Loans, you’ll undergo a credit check, but the government is only looking for some major negative items.
Getting private student loans, however, is trickier. Private lenders offer a variety of loan types, interest rates, repayment options and other features, so it’s a good idea to shop around and compare what’s available before you submit an application.
Also, private lenders have minimum credit score requirements, and they’ll run a credit check to determine whether you’re eligible based on their criteria. If you get approved, your credit history and other factors will also determine your loan’s interest rate.
If you can’t get approved for a private student loan on your own, you can improve your odds with a creditworthy co-signer. But even that’s no guarantee, and some parents may be hesitant to co-sign because the account will show up on their credit report, and they’ll be responsible for paying back the debt if you can’t.
Refinancing student loans
After you leave school, you’ll have the option to refinance federal loans, private loans or both. This process involves consolidating one or more existing loans with a single loan through a private lender.
Refinancing student loans can provide significant benefits, but the process also has its drawbacks for some borrowers. If you’re considering refinancing, most lenders will allow you to get prequalified before you apply, which can allow you to compare loan offers from multiple lenders and decide if it’s the right move for you.
Benefits of refinancing student loans
For starters, if you qualify, refinance rates can be lower than what you’re paying on your current loans, which can save you money and reduce your monthly payment. You’ll also get some flexibility with your monthly payments because you’ll have the option to choose a shorter or longer repayment term.
Finally, if your parent co-signed a private student loan while you were in school, you can refinance into your own name and eliminate their obligations. Parents who take out student loans on behalf of their children can also refinance in the child’s name later on if everyone is on board.
Drawbacks of refinancing student loans
The primary drawback of student loan refinancing is that not everyone is eligible. You typically need good or excellent credit and a relatively high income to get approved and achieve a low interest rate. Also, if you’re refinancing federal loans, you’ll lose access to the benefits the government offers, including loan forgiveness programs, income-driven repayment plans and generous deferment and forbearance programs.