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  • LendKey Private Student Loans / Credit Unions & Community Banks

    Brand:LendKey
    • LendKey private student loans are offered through partner credit unions and community banks.
    • Compare fixed and variable rate loans with flexible terms from multiple lenders in one platform.
    • No origination fees, no application fees, and no prepayment penalties.

What are Private Student Loans?

Private student loans are offered by private organizations such as banks, credit unions, private lenders, and other financial services companies.

Private Loans Can Be Used For

Private loans can only be used for educational expenses. Generally, you only want to take the amount you need to cover the cost of attending. These expenses may include:

  • Tuition
  • Fees
  • Room and board
  • Books
  • Supplies
  • Transportation
  • Computer for school

Finding Private Student Loans

There are many options when it comes to private student loans. One thing to keep in mind is that not all private student loans are equal.

The lender sets the terms and conditions of these private loans, which can vary substantially. It’s important to find a legitimate and reputable lender.

Use the following to help:

  1. Speak with your high school counselor about private lenders
  2. Speak with the college and ask for a list of lenders
  3. Call your current financial institution and ask
  4. Ask people you trust for recommendations and do the research

Depending on what level of college you’re attending, there are different types of private loans. Make sure you’re asking based on your college level: undergraduate, graduate, medical, certification, and continuing education.

How to Apply for Private Student Loans

You can apply for private loans from each lender’s website.

First, calculate the money you’ll need to cover expenses. This is the amount you’ll want to borrow.

Generally, the application for private student loans includes:

  • Your basic personal information and finances
  • During the process, you may be asked to apply with a cosigner. If that is the case, you’ll need their personal and financial information to complete the application.
  • You’ll then get to choose your loan’s interest rate and repayment option.

Lenders do not assess a fee to apply and you may want to steer clear of any that do.

How to Compare Private Student Loans

After researching different lenders, you’ll want to compare and determine which option is best for completing the full application.

Some questions to ask when choosing a private student loan:

  • Who is the lender? Are they reputable and have been in business for some time?
  • What is the interest rate range?
  • Are there variable or fixed interest rates to choose from?
  • Is there an application fee?
  • Are there origination fees or any other fees?
  • Is there an in-school repayment option?
  • Are there ways to lower the interest rate?
  • Will you be required to have a cosigner? And can a cosigner be released?
  • Are there programs that let you make more manageable payments after graduation?
  • Are there other benefits that make the lender more appealing?
  • Is there an after-graduation or out-of-school repayment grace period?

Pros and Cons of Private Student Loans

All federal student loan interest paid and most private student loan interest paid may have tax benefits. However, there are rare cases where a private loan could be a viable alternative to a federal loan. This may occur if you:

  • Are you a graduate or professional school student with a high certainty of job placement
  • Have a very good credit score
  • Can borrow at interest rates lower than current federal loan rates
  • Are completely committed to finishing the degree program on time
  • Have a specific plan to repay your loans within a few years of graduation
  • Have already borrowed as much as you can under the Direct Loan programs

If you have all of the above characteristics, you may also want to consider private student loans.

Your situation may differ, so consult your school’s financial aid office for additional information and shop around with private student lenders to compare.

Advantages of Private Student Loans

Private loans offer a few advantages compared to federal loans.

Fills the financing gap: With federal loans, there’s a limit on how much you can borrow each academic school year.

For example, a dependent undergrad student can borrow no more than $5,500 in federally subsidized loans per year. This may not be enough to cover the cost of attending. Private loans, however, have larger limits that are set by private lenders.

Flexible borrowing options: Private student loans are not needs-based. If you can meet the criteria set by the private lender, you’ll get approved for the loan. Additionally, private loans offer both fixed and variable rates offering more choices to lessen the total cost of borrowing.

Lower rates: In some instances, rates from a private lender may be lower. The US Congress sets the interest rates for student loans each year, which are fixed until repaid. Private lenders compete for your business and use creditworthiness to determine rates, which can mean a lower rate.

Private loans do come with some downsides. Before accepting the loan, consider the following:

Creditworthiness: You’ll need good credit in order to qualify. Having no credit or less than good credit may mean higher loan rates or denial. For many dependent undergraduates, a cosigner needs to be approved. The cosigner’s creditworthiness will be used in the approval process.

Changing rates: A variable interest rate may mean a lower rate today but it can also mean higher rates tomorrow.

Fewer benefits: Federal student loans have amazing benefits, such as income-driven repayment plans and loan forgiveness. With private loans, lenders may offer forbearance for borrowers experiencing financial hardships but do not offer forgiveness or lower payment options. Refinancing student loans may only be the option to lower monthly payments.

Private Student Loan FAQs

Should I take out private student loans?

Private loans can be beneficial when financial aid isn’t enough to cover the total cost of attending school. Before considering private loans, you should exhaust all your federal student loan options. The first step is to complete the FAFSA to determine how much financial aid you qualify for.

Where can I find private student loans?

Private student loans are offered by private lenders such as banks, credit unions, and other financing companies. You must complete a loan application with each lender to start the process. However, many student loan marketplaces allow you to check your rate with multiple lenders before applying.

When do I repay private loans?

The repayment of your private student loans depends on the terms you’ve agreed to. Some private lenders have in-school forbearance where interest accrues, but no payments are required until after leaving school. Other private loans may require immediate payment while in school.

Can I refinance private loans?

Yes, private loans can be refinanced. You can refinance one or multiple loans together to lock in a better rate and new terms. In some instances, refinancing both private and federal student loans may save you thousands of dollars.

Are all private loans the same?

No. Private lenders decide on their private student loan rates, terms, and benefits. When considering private loans, research, ask questions, and decide which loan is best for you. Compare the options available before signing on the dotted line.

How can I pay off my private student loans?

Contact your private lender for the payoff amount. Most private loans do not have prepayment penalties which are fees for paying off loans before the terms are due.

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