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6 Best Private Student Loans
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What happens when your family has run through college savings, private scholarships, federal grants and federal direct student loans and you still need more money to pay for your kids’ college?
Parents, if they’re inclined, can borrow the entire cost of college attendance (minus other grants and aid) from Uncle Sam in the form of PLUS Loans. Graduate students can also borrow up to the full cost of attendance through PLUS loans. (Undergraduates aren’t eligible to take out PLUS loans themselves.)
But PLUS loans don’t come cheap. New PLUS loans issued after July 1 will carry a fixed rate of 7.08% plus a stiff origination fee of 4.248%. (That origination fee is deducted from the loan upfront, meaning you get less than you have borrowed.)
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Surprisingly, private student loans can be a cheaper alternative—if your credit score is high enough. That’s because the rate for PLUS loans doesn’t depend on your score, although if there are certain adverse events in your credit history you may not be able to get a PLUS loan at all.
Here are the top six private student loans for parents and graduate students to consider. Remember, the low end of the interest rate ranges will only be available to those with good credit histories.
Students who are fresh out of high school tend to have a thin credit file, which works against them in qualifying for a private student loan. So lenders encourage parents or another trusted adult with good to great credit to cosign. Their credit histories will be used to determine the interest rate. Cosigning generally means they are on the hook for the loan if the student doesn’t pay.
(Go to the bottom of this story for a handy definition of all the terms used in the reviews.)
Best Private Student Loan Options
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First Published: May 15, 2020, 10:02am