Explore Private Loans

Private student loans are commonly offered by banks, credit unions, or private lenders such as nonprofits like Granite Edvance.

Remember, loans have to be paid back with interest, so you should look at other options including savings, grants, and scholarships first. If you do need to borrow money, it’s a good idea to utilize federal student loans before looking at private loans (as well as federal parent loans). Federal student loans are usually included on financial aid offers from colleges. If you still have a funding gap after accepting these loans, it may be time to look at private loans.

When shopping for a private loan, be sure to carefully compare interest rates and benefits. Here’s what to look for: 

• Fees: Are there origination or repayment fees?  

• Interest rate: Is the rate fixed or variable? A fixed rate doesn’t change. A variable rate changes over time, which will change your total payment. If the rate is variable, how high can the rate go? 

• Terms: How many months or years will you spend repaying the loan? Can you choose between different terms? How long you spend repaying your loan affects how much you will pay in total.  

• Repayment options: When does repayment begin? Are in-school payments required?  

• Cosigner: Is a cosigner required? (See below for more info on cosigners.) How is the cosigner approved (credit score, credit history, debt-to-income ratio)? Can they be released after a certain number of payments?  

• Benefits: Are interest rate reductions available for auto pay or having an existing account? Are deferment options available? 

• Responsible party: Students and parents may choose to work together to pay off their school loans, but it’s important to know who is ultimately responsible for the loan. With a student loan, the student and cosigner are responsible. With a parent loan, the parent is responsible for the loan.  

• Forgiveness: Is the loan forgivable in the case of death or disability? 

Private loans usually advertise a rate range, shown as a percentage. The rate you receive will depend on you and/or your cosigner’s credit scores. Your credit score is based on factors including how much debt you already have, whether you’ve paid your bills and debts on time, and how much credit you have available. A higher credit score usually means a lower interest rate.

When shopping for a loan, be sure to compare APRs, not just interest rates. The APR (Annual Percentage Rate) on a loan may be a little bit different than the interest rate. It includes any fees required to take the loan, such as an origination fee.

Also, be careful about “bait and switch.” Some lenders advertise rates that are so low, they’re only available to borrowers with the best credit and a strong cosigner. Only a very small percentage of applicants might qualify. If you see a loan with a too-good-to-be-true rate, contact the customer service team and ask what percentage of applicants actually receive the lowest rate.

The Federal Parent PLUS Loan, available through the Direct Loan Program, offers the same interest rate to all borrowers (currently 8.94%) and has an origination fee (currently 4.288%.*) While this loan is offered by the federal government and includes many of the same benefits as federal student loans, its current rate is higher than the rate for federal subsidized and unsubsidized student loans (currently 6.39%). It may also be higher than private student loan options for some borrowers. Private student loans typically offer a rate range.