College Avenue Student Loans Edvisors Private Student Loans

Private Loans

Private loans, also known as alternative loans, can be taken out as a supplement to federal financial aid. Students who have used up their Pell Grant money and taken out the maximum allotted amount in federal Perkins and Stafford Loans may borrow additional funds from a private lender. Private student loans may also be taken out by students who were not awarded federal student financial aid for college.

Interest Rates

Private loan rates rise and fall with the economy and vary from lender to lender. Each student lender sets their own interest rate and chooses what kind of borrower benefits their customers will receive. In contrast, federal loans are fixed at rates determined by the government. The interest rates on private loans are typically higher than those on federal loans, but lenders may choose to lower their rates or increase borrower benefits.

Borrowing Limits

The amount of money a student may borrow in private loans is usually greater than the amount that may be borrowed in federal loans. The chosen lender will be able to tell the student how much money they can borrow. For many private loans, the borrowing limit will be the student’s cost of attendance minus their other financial aid. Student federal loan limits are outlined in the award letter a student receives after submitting a FAFSA. By contrast, for the 2014-2015 year, the maximum Stafford Loan money a full-time dependent undergraduate student may borrow varies between $5,500 and $7,500 annually depending on the year in school. If a student’s parent is eligible to receive a federal PLUS Loan, they may be able to borrow more federally.

Choosing a Student Lender

Students who attend schools participating in the William D. Ford Federal Direct Loan (Direct Loan) Program borrow directly from the government, and will not need to select a student lender for their federal loans. (Due to recent expansion of the program, most - if not all - schools participate in the program.) When it comes to private loans, schools typically offer preferred lender lists that recommend lenders to students, but it is best to supplement school advice with personal research. Many student lenders are available, and they offer varying interest rates, borrower benefits and repayment guidelines. Schools are required to process loans from the student’s lender of choice without unreasonable delay, regardless of whether the lender appears on the school preferred lender list.

Private vs. Federal Loan Repayment

  • - Private lenders often require that students begin making payments once the initial disbursement has been issued. In cases where in-school forbearance is granted, interest will generally accrue.
  • - Federal Stafford payments may be deferred until six months after graduation. Interest does not accrue during this time.
  • - Parents who take out PLUS Loans must make the first payment within 60 days after the loan is fully disbursed. Graduate students who take out PLUS Loans may defer their loans until graduation, but interest will accrue during this period.
  • - Both federal and private loans usually have to be repaid regardless of a student’s situation, including bankruptcy. However, federal loans can be discharged under certain rare circumstances.
  • - Some federal loan forgiveness programs also exist for students who go into certain professions after graduation and meet other requirements based on the program.

Latest College & Financial Aid News

College Admissions Deans’ Hopeful Message to the Class of 2021

July 2, 2020

by Izzy Hall

College admission requirements have already changed for the Class of 2021, as many schools have announced test-optional policies for the upcoming application period in the wake of widespread SAT and ACT test cancellations due to the coronavirus. Now, college admission deans have teamed up to sign a statement of empathy to rising high school seniors. Titled “Care Counts in Crisis”, this statement answers the questions of what college admissions teams are looking for in the applications of students who have been affected by the pandemic. [...]

New Menus for College Dining in Fall 2020

June 30, 2020

by Izzy Hall

The college dining hall – a place for food, friends and well-earned breaks. It’s known for a wide array of food bars, buffets, made-to-order stations and generous ice cream offerings. But for the Fall 2020 semester, the dining experience will undergo a reinvention to serve food safely amidst the novel coronavirus. What will the dining halls of the COVID-19 era look like? [...]

Paying for College during Coronavirus

June 26, 2020

by Susan Dutca-Lovell

If you're worried about how you will pay for college during the COVID-19 pandemic, you're not alone. Students and families are concerned about the college financial ramifications as a result of the coronavirus pandemic, and higher education institutions are anticipating an increase in students' financial aid need, as well as a large number of college financial aid appeals. Fortunately, there are ample options and resources to help you pay for college these coming semesters. Explore the various options to find out which works best for your situation - from scholarship deadline extensions to relief provided through the CARES Act and more. [...]

Last Reviewed: July 2020