Private Loans

Private loans are available to help you cover additional costs of education, but keep the following information in mind:

• Federal PLUS loans offer a low-fixed interest rate, easy application process with basic credit requirements, and deferment and forbearance options to assist you when you are unable to make payments.
• If you are denied for a PLUS loan, your child may qualify for an additional Unsubsidized Stafford loan. Check with your financial aid office.
• If you decide to apply for a private loan, you should shop around. Private loan programs will vary greatly depending on the lender.

The following list of questions will help you know what to ask when shopping for a private loan:

What is the interest rate on your private loan? The interest rate will often vary based on your credit score.

Is the interest rate fixed or variable? How often does the interest rate change and what is the rate based on?

What is the APR (Annual Percentage Rate) on the loan? The APR provides you with the total cost of the loan and will help you compare each loan and the fees associated with the loan.

What fees do you charge? Often lenders will charge origination fees or repayment fees. In some cases, you may even be charged an application or credit processing fee.

Is there a penalty for pre-payment of the loan? There should never be pre-payment penalty.

What borrower payment incentives do you offer? Some lenders offer interest rate discounts for on-time payments or automatic payments of your student loan. Verify how incentives are earned and how the incentive is lost. Some lenders revoke incentives if you are one day late on a payment.