Private student loans are provided by private lenders - credit unions, banks, and online lenders. You can use private loans to pay for education costs and living expenses, which your federal education loans may not cover. Interest rates and terms on private student loans can vary, depending on your financial situation, credit history, and the lender you choose.

Student loan interest works by adding a percentage of the loan amount to your outstanding balance over time. This interest rate represents the cost of borrowing money. When you make monthly payments, a portion of the payment is allocated towards covering the accrued interest, while the remaining amount goes towards reducing the principal balance (the original loan amount). Choosing a lower interest rate can help you save money over the life of the loan and accelerate the process of paying off your debt.

For in-school private student loans, the funds are typically sent straight to your school to cover tuition. The school then gives the rest of your loan money directly to you for other expenses related to getting your degree. Your school sets the disbursement date, which is usually around the beginning of the semester.

For student loan refinancing, no new funds are disbursed. Instead, your new private lender pays off your existing loan(s) and gives you a new loan with new terms. This generally happens within a few days, but always check with your lender(s).

With a private student loan, you’re eligible to borrow up to 100% of what your school says it costs to enroll and attend classes (the “cost of attendance”), minus other financial aid and loans you’ve already received.

How much you can actually borrow will vary by lender and can include annual or cumulative borrowing limits. Other private lender criteria that can affect how much you can borrow might include your credit history, the credit quality of your cosigner, your school’s certified cost of attendance, the degree you’re earning, and more.

Each lender has different requirements when it comes to qualifying for a private student loan. But typically you must:

• Have a qualifying credit score (or a cosigner with one)
• Have a qualifying income and debt-to-income ratio (DTI) (or a cosigner with one)
• Be enrolled in an eligible education program
• Be a U.S. citizen or legal resident with a Social Security number
• Be at least 18 years old and hold a high school diploma or equivalent (or have a cosigner)
• Use the loan for education purposes only
  

You can get a student loan with bad credit, but not necessarily on your own. While federal loans don’t require a credit check, private student loans do. Many students don’t qualify for private loans on their own because they don’t have a credit history or they have bad credit. If that’s your situation, you may need to add a cosigner to qualify for a private loan.

Private student loans require a credit application that examines income, employment, and a credit report. The lower your credit score, the higher the risk for the lender, which translates into higher interest rates. One way to get approved for a loan with a lower rate can be to add a creditworthy cosigner to your loan application.

Before you borrow, you’ll need to decide whether you want a fixed-rate or variable-rate student loan. Here’s the difference between the two:

• A fixed-rate will stay the same over the course of your loan term. This also means your payments won’t ever change.
• A variable-rate can fluctuate and possibly even increase over time. Because of this, your payments might rise or fall.
  

You can apply for private student loans at any time since there’s no deadline tied to them (like filling out the FAFSA for federal loans). But it’s still a good idea to apply for private loans as soon as you know you’ll need them to cover education costs. Although it varies depending on the lender and your school, it can sometimes take 3 to 5 weeks for you to receive the funds. So, if you’re trying to decide when to apply for a private student loan, be sure to give yourself some time and apply sooner rather than later.

It depends, but in most cases, yes. You don’t have to add a cosigner unless you’re under the age of majority in your state (usually between 18 and 21). But if you have a limited or poor credit history, lenders may require you to add a creditworthy cosigner to reduce their risk on the loan. Plus, more than 90% of private student loans taken out by undergraduate students are cosigned. Even if you’re a graduate student and don’t need one, adding a cosigner with good credit can improve your chances of qualifying for a private student loan at a lower rate. Our marketplace even makes it easy to compare cosigners to see which cosigner can help get you the best rate.

Discovering your pre-qualified rates has never been easier. Click here and let us guide you through the process.