Private Student Loans

To apply for private student loans, students must apply directly through various lenders.

After you submit an application and receive approval for a private student loan, you typically will be presented with multiple options such as:

• Variable or Fixed Interest rates
• Loan term (also known as Repayment Term)
• Repayment Plan

In addition, you will see the interest rates offered to you as well as any fees associated with the loan. It’s important to understand what you’re choosing between. The following sections will help you understand any student loan options presented to you.

INTEREST RATES

When it comes to the actual interest rates, don’t assume that all lenders’ rates are the same. Some lenders offer better pricing than others.

VARIABLE VS. FIXED INTEREST RATES

A variable interest rate can fluctuate over the course of your repayment period as the index selected by the lender fluctuates up or down. The most common index used for student loans is the London Interbank Offered Rate (LIBOR) index. As this changes, so will your interest rate.

A fixed interest rate remains the same for the life of the loan. The interest rate you receive when you take out the loan will be the same interest rate you have throughout the entire repayment period.

While the variable interest rate may be cheaper on the day of your application, you should consider your personal tolerance for the risk that it could go up or down over the years.