Private
Student Loans
Private
student loans are credit-based, non-federal student loans
that can help you cover any school expenses you have remaining
when scholarships, grants, and federal student loans aren’t
enough.
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Many private student loans will
help you cover up to 100% of your school costs — not just
your tuition and fees, but other acceptable college expenses like
rent (or room and board), textbooks, a laptop, and your trips
home.
Eligibility
U.S. citizen or permanent resident
Enrolled at a lender-eligible school
Creditworthy (or applying with a creditworthy co-signer)
Eligibility requirements for private student loans will vary by
lender, but most private loan programs require you to be a U.S.
citizen or permanent resident. You’ll also need to be attending
a lender-eligible school.
Because private student loans
are credit-based loans, you’ll need to meet credit requirements,
which vary by lender. In general, you’ll need to provide
a credit history, as well as income and employment information.
Since most college students typically
have little or no established credit, you can increase you chances
of meeting a lender’s credit requirements by applying with
a creditworthy co-signer.
Loan Amounts
Minimum and maximum loan amounts will also vary by lender. But
many private student loan programs will cover up to 100% of your
cost of attendance, less any other financial aid you’ve
received.
Your total cost of attendance
may need to be certified by your school. Some lenders may calculate
their own cost-of-attendance figures, based on information provided
by your school.
Rates & Fees
Most private student loans are variable-rate loans, with interest
rates varying by lender. Your interest rate may adjust monthly,
quarterly, annually, or at some other interval as designated by
your lender.
The interest rate on a private
student loan is generally determined by adding a variable index
(such as LIBOR or T-bill) to a fixed margin. The margin used to
determine your student loan interest rate can vary depending on
your creditworthiness. Borrowers who are deemed more creditworthy
typically qualify for lower margins (and thus lower interest rates).
Fees, like interest rates, will
also vary by lender. The types of fees assessed, as well as the
amounts charged, will depend on the lender and may also depend
on your creditworthiness.
Here are some common lender fees
you may run into, but keep in mind that not all lenders will charge
all these fees:
Application Fees: Fee charged
in order for you to apply for a private student loan. Paying an
application fee doesn’t guarantee approval of your application.
Origination Fees: Fee charged in order for a lender to issue you
(“originate”) your private student loan. Origination
fees are often added into your loan amount. The origination fee
you pay may vary depending on your creditworthiness — borrowers
with stronger credit may pay lower origination fees than those
borrowers with weaker credit.
Repayment Fees: Depending on your creditworthiness, some lenders
may assess a repayment finance charge at the time that your private
student loan goes into repayment.
Repayment
Questions to ask when you’re researching your student loan
options:
When does repayment begin?
Are there any prepayment penalties?
Are there any forbearance or deferment benefits?
Repaying Your Private Student Loan
Some private student loan programs will allow you to defer payments
while you’re still in school. Others will require you to
begin repayment right away or after a certain grace period.
Private student loans that require
you to make payments while you’re in school may allow you
to make interest-only payments. By paying the monthly interest
while you’re in school, you’ll keep that interest
from being added to your principal and capitalized, which can
save you thousands of dollars in interest once you graduate.
Prepayment Penalties
Most private student loans don’t carry any prepayment penalties.
A prepayment penalty is a fee assessed if you pay off your student
loan early.
Forbearance & Deferment
Forbearance and deferment benefits can allow you to postpone making
your student loan payments when you encounter financial hardship,
such as losing your job. Unlike federal student loans, private
student loans don’t come with any automatic forbearance
or deferment benefits; these benefits will vary by lender.
While some lenders may offer forbearance
and deferment benefits, others offer no forbearance or deferment
options, while still others may address forbearance requests from
borrowers on a case-by-case basis.
Before Applying
Before you apply for a private student loan, make sure you’ve
taken advantage of all your free-money options and federal financial
aid first. Since private student loans are typically more costly
than federal student loans, you want to make sure you’ve
taken advantage of all your low-cost federal student loan options
first — Perkins student loans, Stafford student loans, Grad
PLUS loans for graduate students, and PLUS loans for parents.
Apply for scholarships and free
money. The NextStudent Scholarship Search Engine lets you search
our database of more than 6.2 million scholarships valued at over
$16 billion absolutely free.
Apply for low-cost federal student loans. You’ll need to
complete the FAFSA (Free Application for Federal Student Aid).
Ask your parents about a federal parent loan. Federal PLUS loans
are available for the parents of dependent undergraduate students.
Apply for a private student loan only if you still have unmet
need.
Find a creditworthy co-signer for your private student loan. Since
private student loans are credit-based loans, applying with a
creditworthy co-signer can increase your chances of being approved.
You may also qualify for a lower rate and lower monthly payments.
Quick Links
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Important Information:
Since federal student loans generally offer more attractive terms
than private student loans, you should always use your federal
financing options first. You should only consider taking out a
private student loan if you find that, even after your federal
loans and grants, your school costs still exceed your available
scholarships and financial aid. In that case, a private student
loan could provide the remaining money you need.
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In order to provide you with a
student loan, it will be necessary for us to share the information
you’re providing here with certain third parties, such as
a lender or servicer. Any personal information you provide to
us on this form may be shared with a third party as outlined in
our privacy policy, for the purposes of providing you either with
a student loan or with other products or services.
NextStudent is a marketer of student
loans and is not the lender for the NextStudent private loan.
All loans are subject to credit approval. NextStudent private
loans may not be available in all states. Borrower benefits, terms,
and conditions are subject to change without notice.
