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College Ave is an online lender specializing in private student loans and refinancing.
Quick & easy:
Apply in less than 3 minutes
Flexible repayment options.
Repay in 5, 8, 10, or 15 years
Borrow up to 100% of the cost of attendance
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Select your loan type
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Fill out a short form
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1) The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 1/2/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
A private student loan lender that compares interest rates from multiple lenders and helps students find suitable loan solutions.
Compares up to 8 lenders at once
100% free to check prequalified rates
No hard credit inquiry when comparing rates
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Answer a few questions & get personalized results
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Pick a lender of your choice & fill out the lender's form
If you’re aiming to pursue higher education, chances are you’re also considering how to fund your educational journey. Filling out the FAFSA to apply for federal aid is a logical first step, but another avenue worth exploring is that of private student loans.
In this article, we’ll shed light on what private student loans are, how they work, and what you should consider so that you can make informed decisions for your financial future.
Let’s jump right in!
What are Private Student Loans?
Broadly, there are two major types of student loans: federal student loans and private student loans. Federal Loans, as the name suggests, are those offered by the federal government.
Private student loans are educational loans offered by private lenders, such as banks, aggregators, credit unions, and online lenders.
How Do Private Student Loans Work?
Private student loans generally require borrowers (i.e. you or your parents) to fill out an application form for approval. If approved, your loan amount will typically be applied to cover expenses at your university, such as tuition fees, boarding expenses, etc. Funds left over, if any, are usually accessible for additional academic resources (for instance, if you want to purchase books). These policies may vary slightly based on the lender and university.
In most cases, to avail of a private student loan, you may require what is known as a co-signer. A co-signer is someone who has a good, steady income source, and will be able to take over your loan payments in case you are unable to do so. (Some lenders may also offer loans that do not require a co-signer).
The interest for most private student loans begins accruing once you receive the money. You may not need to make payments towards your loan until after you graduate, but these policies differ with each lender, so it’s best to check the conditions before applying.
Types of Private Student Loans
Most private student loan providers and lenders offer a few different types of loans. While these differ by lender, here are the most common types of private student loans you should know about:
Fixed Interest Rate Loans:
These loans come with a set interest rate that remains consistent throughout the loan term. With a fixed rate, you can expect predictable monthly payments, which may be helpful for budgeting and planning. Federal loans also follow a fixed interest rate. Interest rates for private loans could be higher or lower than those of federal loans.
Variable Interest Rate Loans:
Unlike fixed-rate private student loans, variable interest rate loans have an interest rate that can fluctuate over time, based on market conditions. While the initial rate may be lower than a fixed-rate loan, the rate can increase or decrease in the future, potentially impacting monthly payments.
Undergraduate Loans:
Designed specifically for undergraduate students, these loans are tailored to meet the financial needs of those pursuing their associate’s or bachelor’s degrees.
Graduate Loans:
Geared towards students pursuing advanced degrees, such as master’s or doctoral programs, these loans provide additional funding options for graduate students. These may offer higher loan limits to accommodate the specific needs of graduate students (varies with lenders).
Parent Loans:
These loans are available for parents or legal guardians who want to assist their dependent students in financing their education.
Specialized/Career-Specific Student Loans:
Some lenders offer loans to fund specific expenses in particular areas. For example: Bar Study Loans help law students cover bar exam costs.
Not all private lenders offer all of these loan types. The right type of loan for you is the one that matches your needs, and could help pay for expenses that your other financial aid options may not cover.
Should I Take Out a Private Student Loan?
Whether or not you should take out a private student loan depends on a number of factors. First, you should consider your family’s financial status. If you have genuine financial need, federal financial aid may be available, which could help cover a significant portion of your college expenses. You may then only need to borrow a smaller amount to cover the remaining expenses if required.
Next, you should calculate the approximate total of expenses you are likely to incur. This may include expenses for tuition, resources, travel, living expenses, and more. Compare these amounts across colleges, so that you get a better idea of the cost ranges. Knowing this total amount will help you understand how much money you really need. This way, you may be able to borrow only as much as you’d need, without unnecessarily incurring additional debt.
Lastly, you should carefully review each lender you’re considering before applying for a loan. Make sure the private student loan lender is credible, and offers transparent information on the loans provided.
Things to Consider Before Taking Out a Private Student Loan
With private student loans, you should consider a few things before making your decision:
Credit History:
Private lenders may require you to have a solid credit history or a cosigner with good credit. Your creditworthiness plays a significant role in the approval process and could impact the interest rate you’re offered.
Repayment Options:
Private lenders may have different repayment plans and options available. Make sure to understand the repayment terms, including the grace period, deferment, and forbearance options, as well as any fees or penalties associated with early repayment.
Borrowing Limits:
Private student loans may have borrowing limits that differ from federal loan programs. Some private student loan options may even offer higher loan limits than federal programs. You should be aware of the maximum amount you can borrow and ensure that it aligns with your financial needs.
Specialized Loan Options:
As mentioned earlier, some lenders offer specialized loans that cover specific academic expenses that federal aid may not cover.
For instance, federal student loans are usually not available for costs incurred by law, medical and dental students after they graduate, such as expenses associated with studying for the bar or finding a residency. Certain private lenders, however, offer Bar Study Loans, Residency and Relocation Loans, etc., to help cover exam fees for law students and costs associated with finding residencies for medical students, respectively.
At the end of the day, the decision on whether or not to take out a private student loan should be made after careful consideration of all these factors. And, of course–meticulous research!
How Do I Apply For a Private Student Loan?
1. Gather your information
Before applying for private student loans, you might need to keep some information on hand. This may include your Social Security number, financial forms, employment information, and the desired loan amount. If you have a co-signer, you may need their personal and financial details as well.
2. Compare lenders after thorough research
If you’re considering a private loan, you should check multiple lenders to make sure you’re getting a suitable deal. Reviewing multiple lenders can help you identify the offer that suits you. While comparing, you should pay attention to additional details like repayment options, which could make a considerable difference later on. There are also a number of aggregators who make this easier by partnering with multiple lenders, which facilitates quick comparisons.
3. Get prequalified when possible
Before submitting a full application, many private lenders offer the convenience of prequalification through a soft credit check. This preliminary step allows lenders to provide you with an initial quote based on the information they can access, without affecting your. This allows you to see the interest rates and terms you’re eligible for, and whether or not you’ll need a co-signer.
4. Fill out applications
The applications for private lenders are usually quite similar, requiring almost the same information. Make sure to fill them out in time to get approved before the upcoming semester starts.
Conclusion
Private student loans offer a valuable financial solution for students seeking to pursue their higher education goals. While federal student loans provide substantial support, private student loans can fill in the gaps and offer flexibility tailored to individual needs. By carefully assessing your financial situation, exploring different loan options, and considering factors such as interest rates and repayment terms, you can make an informed decision about whether a private student loan is right for you. If it aligns with your requirements and makes sense financially, private student loans can help bridge the funding gap and unlock new opportunities for educational success.
Frequently Asked Questions (FAQs)
Not all private student loans can be consolidated. However, a few lenders, like Credible, do offer consolidation and other student loan refinancing options for eligible students.
There are a number of lenders that offer private loans that don’t require a co-signer. Some private loan lenders also offer solutions tailored for students or families with bad credit. To be eligible for these, you may need to meet certain criteria. Be sure to go through the terms and conditions carefully, to make an informed decision.
Yes, some private student loans can be used to cover educational expenses for studying abroad, including tuition, travel costs, and living expenses. The terms may vary with each lender, so while comparing lenders, be sure to check for any specific requirements or restrictions concerning foreign education.
Private student loans typically do not qualify for federal forgiveness or discharge programs. However, some lenders may offer their own options for loan forgiveness or discharge in certain situations.
