Private Loans

Before considering a private student loan, it’s essential to understand the differences between private and federal loans. Private loans are often more expensive and offer fewer borrower protections. A private loan might be the right choice if:

• You are ineligible for federal student aid.
• You can secure a lower interest rate than a federal loan.
• You expect a high income soon after graduation and plan to repay the loan quickly.
• Visit the Federal Student Aid website for comparisons between federal and private loan options to make the most informed decision.

Here are key factors to keep in mind:

Interest Rates

Private loans can have either fixed or variable interest rates. Variable rates might start low but can increase over time, impacting the total cost of the loan. Always check if there is a cap on how high the interest rate can go.

Credit Requirements

Your interest rate will be based on your creditworthiness or that of your co-signer. A stronger credit profile generally means a lower interest rate. If you need a co-signer, consider their financial commitment and how long they will be obligated on the loan.

Repayment Terms

Unlike federal loans, private loans may require repayment to begin while you’re still in school or during residency. Review the promissory note carefully to understand deferment, forbearance, and grace period options.

Loan Protections

Federal loans offer specific benefits like loan forgiveness, deferment, or discharge in cases of death or disability. These options may not be available for private loans.