Private student loans, as opposed to federal loans, are backed by independent lenders and companies who allow prospective students to take out money for college.
As discussed in earlier posts, private loans allow students to apply for financial help much in the same way a bank does. They have various loan programs available that often include either fixed or variable interest rates.
Usually, lenders will require a credit check before they offer a loan. Unlike the federal government, they need some assurance that the lender will be able to pay back the money when the time comes.
Below are some of the most popular student loan companies that you may want to check out.
1. College Avenue
There is no application or origination fee for applying for a student loan with this company. There is also no fee for paying off the loan early.
2. Sallie Mae
Interest rates range between 5.74 to 11.65 for a fixed rate loan and between 2.25% and 9.37% for a variable rate loan. There is no origination fee to apply.
This institution has loans that are funded by the credit unions and community banks. You can apply anytime and receive your loan fairly quickly. They have no origination fee because they do everything digitally and online, passing the savings onto you.
4. Citizens Bank
Citizens Bank allows students to borrow up to a very large amount of $350,000 with variable and fixed interest rate terms. The interest rate for fixed-rate loans is between 3.89 and 9.99% and the variable rate is between 3 and 9.74%. Check out NerdWallet’s review of Citizens Bank student loans and decide for yourself if it’s a good deal.
This company offers student loans with a 2% origination fee. This is relatively low, but students seeking a loan with this company should keep it in mind. This means that you’ll pay an extra 2% of the total loan amount to process the loan. They do have a low starting interest rate though.
All of these companies and lending institutions offer a viable way to attend the school of your choice and start on your path to knowledge. It’s wise to check out each one of them, as a frame of reference of the types of loans that are available in the private loan sector.
Some parents and students prefer to deal with private lenders over federal lenders because you are not dealing with the Federal Government and it is more of a personal transaction between you and the bank. However, there is usually no way to defer or enter forbearance for payments that you have trouble paying.
You can, however, sometimes refiance your loan by consolidating it with another company or asking to lower your payments by converting your loan to a longer term.
You will need a cosigner with private student loans if you do not have a good credit rating. This is due to the fact that private lenders need some assurance that they will get their money back in the event the original borrower cannot pay.
Parents, grandparents, and others who are related tot he child can usually cosign, but check the regulations for this when you inquire with any of these individual companies and lenders.