by Contributing Author
Current United States’ student loan debt stands at $1.7 trillion unevenly distributed among 45 million borrowers. That makes student loan debts second highest after mortgage and considerably higher than debit and credit card loan debts combined. Private student loans offer higher borrowing limits and lenient payment terms, one of the reasons they’re becoming popular among college and university students. Although private student loan providers and programs aren’t the same, the best student loan must meet the following features.
Friendly Eligibility Requirements
One of the characteristics of best private student loans is friendly eligibility requirements. Most private student loan providers and programs require meeting the set credit ratings. Borrowers with low credit ratings will have to provide a trusted co-signer. While some student loan providers will ask for proof of income, others will go the extra mile to analyze your debt-to-income ratio. Most private student loan providers require you to prove that you’re attending an accredited college or university. Often, most personal loan providers only offer loans to students who are permanent residents or citizens of the target country.
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Affordable Loan Fees
Private student loans with the student’s needs in mind won’t have exorbitant fees. Look for lenders with a reasonable nonrefundable application fee and origination fees. Loan providers that ask for more than a 5% origination fee should be avoided. If possible, get loans from student loan providers that don’t have a late fee. If you must secure the student loan from a lender with a late fee, ensure it is within your reach as you wouldn’t want to be caught up with fast accumulating loan penalty fees.
Lenient Interest Rates
One feature that differentiates the best student loans from the rest is the leniency of the interest rates. Whether the private loan lender offers variable or fixed interest rates, make sure you’re not overpaying for the loan. Many loan providers will disclose every detail about loan interest rates. However, most loan lenders offer customized loan terms and interest rates depending on the borrower’s credit rating. A larger percentage of lenders offer prequalification to enable you to know your loan interest rate beforehand. Often, fixed rates are a bit costlier compared to variable interest rates.
Reasonable Repayment Terms
Among the many characteristics of the best private student loans is reasonable repayment terms. Loan payment terms vary from one private student loan lender to the next, but the best student loan providers offer affordable and friendly rates and terms. Some loan providers work with immediate repayment terms, where you can start paying for the loan soon after the money is loaded into your account. This type of repayment option lets you cut on interests and pay the loan faster. Some loan lenders offer interest-only repayment, where you can pay for the interest while schooling and pay the rest after graduation. Other loan providers offer full deferment terms where you can defer the loan payment while in school during your grace or separation period.
You’re after a feasible and affordable loan as a student, but you shouldn’t forget about the repayment period. You wouldn’t wish to take a loan that would hold you back and make it impossible for you to grow financially after school. However, that’s no excuse to settle for a loan that would take you 25 years to pay, only for you to pay exorbitantly on interest. Look for a loan you’re comfortable paying while schooling and after graduation. Settle for a payment period that’s not too long or too short. The goal is to find a loan that you will pay comfortably and without compromising your everyday life.
All private student loans aren’t equal because not every student loan provider or program is equal. To get the best private student loan for financing your college education, take time to evaluate the characteristics of the student loan. You might secure a more feasible private loan by comparing several student loan providers.