Private student loans for undergraduate students function similarly to other types of private loans in that a credit and income review will be required to determine your ability to repay the loan. This review can also affect the interest rate on your loan. Since most undergraduate students have not yet established a credit history or have a steady income, it is often necessary to apply with a cosigner.
Learn more about undergraduate student loans at College Ave. Some private lenders offer parent loans, which are made to a parent or guardian who is helping a student pay for school; the student is not legally responsible to repay a parent loan.
Learn more about parent student loans at College Ave. Private loans for graduate students work similarly to other types of private student loans; a graduate student might need a cosigner or have a parent or guardian take out the loan for them. Learn more about graduate student loans at College Ave. Private loan terms, including interest rates and fees, vary by lender and usually are determined based on your credit history and potentially other factors.
Most lenders offer both variable and fixed interest rates. A fixed rate remains unchanged for the life of the loan. This can be helpful when making financial plans, as your monthly payments will be known. Variable interest rates can fluctuate, which makes monthly payments harder to predict. However, depending upon your credit history, you might obtain a rate that stays relatively low, even with fluctuations.
Federal loans offer fixed interest rates, which is just one reason they are frequently considered beneficial over private student loans. To see how interest rates affect the cost of your loan, check out our student loan calculator. For example, private lenders typically cannot offer income-contingent repayment plans or loan forgiveness. That said, the terms of a private loan can typically be altered after signing if assistance is needed.
The sooner you begin paying down the principal and interest on a private loan the better, but circumstances do not always allow for that.
Repayment options vary by lender but common plans include:. Some lenders offer more repayment flexibility than others. At College Ave. Learn more about student loan refinancing options at College Ave. Since many students have limited credit history and income, private student loans typically require a cosigner.
A cosigner is often a parent or other family member who has established credit and income who agrees to take equal responsibility to repay the loan if the student borrower is unable.
There are, however, limits to how much you can borrow under the Direct Loan program. Private student loans come into the mix if the federal funds are not enough to cover the cost of attendance. Before deciding how you will finance your education, it is important to consider the differences between private student loans and federal loans as they apply to you and your overall financial picture.
A private student loan might offer a lower interest rate, depending upon your credit rating and income or that of your co-signer. Some also offer higher borrowing limits and fixed interest rates. Private student loans do not require any demonstration of financial need. If you are a parent or graduate student considering a Direct PLUS loan , you may want to consider a private student loan. If you have a strong credit history, you may be able to save money with a private student loan. Just make sure you review the benefits — such as public service forgiveness — that are unique to the federal program before you make your final decision.
Student loans — federal and private — are all part of your financial aid package, which can also include scholarships and endowments. Your school determines your costs, so that is a solid place to start exploring all assistance options. Interested in a private student loan? At College Ave we make applying easy to understand, and you get an instant decision. Start your application here! Apply Pick the loan you would like to apply for or Find Your Application.
Who can apply? Undergraduate Students. Perkins Loan. Parent PLUS loans allow parents of dependent students to borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance.
The program does not set a cumulative limit to how much parents may borrow. Parents must start repaying PLUS loans as soon as the loan is fully disbursed to the student or the school.
However, parents may be able to request to delay making payments while their child is in school or for an additional six months after their child graduates, leaves school, or drops below half-time enrollment by requesting a deferment.
Parents should contact their loan servicer for more information about how to delay making payments. Parents are still responsible for the interest that accrues while the payments are postponed. If a borrower consolidates their loan into a Direct Consolidation Loan, they are also qualified for the Income-Contingent Repayment Plan. To qualify, you must make on-time payments meeting the following requirements:. Searches are limited to 50 characters.
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Skip to main content. Student loans. There are two types of Stafford Loans: subsidized and unsubsidized. Subsidized Stafford Loans are available only to undergraduate students attending school at least half time and are based on financial need. Unsubsidized Stafford Loans are available to both undergraduate and graduate students and are not based on financial need; any student attending at least half time is eligible.
Both subsidized and unsubsidized Stafford Loans have annual borrowing limits. Direct Plus Loans. Stafford Loans are the most common federal loan that students use to help pay for college or graduate school. Here are the current borrowing limits:. PLUS Loans have no dollar borrowing limits per year; graduate students and parents are able to borrow up to the full cost of attendance minus other financial aid received.
The following table shows the interest rate for Stafford and PLUS Loans issued July 1, , through June 30, the rate is fixed for the life of the loan but resets each July for new loans.
One of the main benefits of federal student loans is that the government offers several repayment options. Standard Repayment Plan. With this original repayment plan, you pay a fixed amount each month over a year term.
Graduated Repayment Plan. The repayment term is still 10 years, but payments start out lower in the early years of the loan and then increase gradually, usually every two years.
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