Best Private Student Loans of March 2024

If federal student loans don’t fit your needs, compare private student loan interest rates and lenders to find the right financing option for your college expenses.

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Private Student Loan Interest Rate Trends

Student loan interest rates increased last month, according to a U.S. News analysis of minimum and maximum APRs reported by private lenders. Student loan rates have trended higher during the past year, with variable rates climbing by a higher margin than fixed rates.

Here are the in-school student loan rates offered during the month of January 2024:

  • Average fixed APR range: 4.46% – 14.90% (Compared to 4.37% – 14.67% the previous month).
  • Average variable APR range: 5.08% – 15.08% (Compared to 5.11% – 14.90% the previous month).

The APRs on the lower end of the range are generally reserved for applicants with a high credit score and low debt-to-income ratio, while those with poor credit or limited income will see higher rates.

If you don’t have the credit history needed to qualify for a competitive student loan rate, consider enlisting the help of a co-signer. Additionally, shop around with multiple student loan lenders to ensure you’re getting the lowest possible rate for your financial situation.

How Can Students Maximize Federal and Free Financial Aid?

Before you consider private student loans, make the most of federal and free financial aid, including private scholarships. You may be eligible for federal Direct Unsubsidized Loans, but there are limits on how much you can borrow each academic year and overall. Annual borrowing limits range from $5,500 to $20,500.

“Your first step in financing your education is to submit a Free Application for Federal Student Aid, commonly called a FAFSA,” says Jay S. Fleischman, a lawyer who advises student loan borrowers on effective repayment strategies.

Even if you don’t think you’ll need financial assistance or think you won’t qualify, submit a FAFSA, which is the key to most financial aid. It’s a requirement for the student financial assistance programs authorized under Title IV of the Higher Education Act, including federal loans, grants and work-study programs. These do not have income or GPA cutoffs, which are common myths.

How Do Private Student Loans Work?

Unlike federal student loans, private student loans do not offer standard repayment plans and interest rates. Your credit, and that of a co-signer if you have one, will affect the types of loans you qualify for and the student loan interest rate you’ll receive.

Loan Types

Private lenders may offer different types of loans depending on the degree you’re pursuing. The loan type can affect your loan amount, interest rate and repayment terms.

  • Community college or technical training. Some lenders provide loans to students who are pursuing two-year degrees, attending nontraditional schools or going to career-training programs.
  • Undergraduate school loans. You can take out undergraduate loans to pay for expenses while you pursue a bachelor’s degree. Undergraduate loans may have lower interest rates and higher loan limits than community college loans.
  • Graduate or professional school loans. Graduate school loans tend to have higher maximum loan amounts than undergraduate loans, reflecting the higher cost of attending school for a master’s degree or doctorate. Some lenders have special loan programs for business, law or medical school.
  • Parent loans. Lenders offer these to parents of students. Some families have an informal agreement that the child will make loan payments after graduating, but the legal responsibility to repay the loan falls on the parents.
  • Loan TermsThe loan term is the length of the loan’s repayment period, which could range from five to 20 years for private student loans. Typically, shorter loans have higher monthly payments than longer loans but lower interest rates and lower total costs.Loan LimitsLoan minimums: Most lenders have minimum amounts you can borrow, which may vary based on your state. Because the minimum could be as low as $1,000, a private student loan may not be the best option if you only need a few hundred dollars for textbooks or another small expense.Loan maximums: Lenders may set a maximum annual amount you can borrow or establish a combined private and federal amount you must fall under to qualify for a loan. You may also be limited to borrowing up to your school’s certified cost of attendance, which is outlined in your financial aid award letter.Interest Rate TypesLenders offer student loans with either fixed or adjustable interest rates. Carefully consider your options because you may not be able to switch your interest rate type after taking out a loan, without refinancing.When you’re comparing student loans from different lenders, look at the annual percentage rate, or APR, rather than the interest rate. The APR is your total cost of borrowing each year and includes interest and fees.

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