Are you looking for additional funding beyond federal student loans for college? Or maybe you are considering refinancing your student loans with a private lender?
Either way, the process of finding and applying for private student loans is a little different than for federal student loans. With federal loans, your loans are assigned to a loan manager, and the terms you get are the ones the federal government approved for that school year.
With private loans, on the other hand, you can research your lender and even negotiate better repayment rates and terms. You might assume that private lenders only offer one student loan option with a set interest rate and repayment terms. But this is in fact not the case. Several popular banks and private finance companies offer a variety of interest rates, as well as flexible repayment plans.
Differences in repayment plans
Before we jump into the list of the five student loan companies that currently offer flexible repayment options, let’s get this straight. Flexible repayment here is not the same as flexible repayment under federal student loan programs.
With federal student loans, you can choose from a variety of repayment plans the moment you start repaying. And throughout your repayment terms, you can also change your repayment plan if needed. So if you are starting with a higher standard payment but are having financial issues, you can easily switch to an income-driven plan with a lower monthly payment.
Another option: CommonBond Review: CrowdFunding for Student Loans
This is not necessarily the case with private student loans. With these loans, you will choose your payment plan at the start of the loan term. The flexibility comes from your ability to choose between a fixed and variable APR, and also to choose the length of your loan. A longer term and lower APR will result in a lower monthly payment, or vice versa.
But once you’ve locked in an interest rate and payment plan for a private student loan, you’ll need to stick with it except in certain circumstances. With some lenders, you can put your payments on hold if you are going through a time of financial stress. But you may need to go through a refinancing process to actually change your interest rate or repayment terms.
That said, these benefits vary from lender to lender. It’s always worth considering whether you can change your repayment terms later when you apply for a private student loan.
Companies that offer flexible repayment plans
Currently, the private student loan market is quite small. This is in part because so many students get their financing needs out of federal student loans. In general, it is best to start with government guaranteed loans, which offer various benefits, and then consider refinancing with a private lender after graduation.
However, this is not always the best case scenario, especially if you have a good credit rating and a solid income. In this case, you may be able to qualify for a lower interest rate on a private student loan. That’s why it’s important to shop around and understand your options before you start. all student loan debt.
When shopping, be sure to check out these five companies and banks that offer flexible repayment terms for your student loans. (All prices shown are in effect as of December 5, 2016.)
This company started out specifically focused on refinancing student loans, but has expanded to offer other types of financing. It doesn’t offer traditional student loans initially, but it does offer student loans to parents. SoFi is also a great option for refinancing your student loans.
Right now, on its student loan refinance option, SoFi offers variable rates starting at 2.31% and fixed rates starting at 3.35% (both with Autopay). As with many other businesses, SoFi offers a discount on the interest rate when you sign up for direct debits. The lowest advertised rates are available to those who sign up for AutoPay. This lender also has several repayment tenure options for student loan refinancing.
If you are a parent looking for additional funding for your child’s education, SoFi offers student loans for parents. These have variable rates from 5.74% to 14.60% and fixed rates from 5.99% to 16.49%. These loans are available up to the full cost of the participation, have no origination fees, and have two term options: five years and ten years.
This long-standing bank offers student loans directly available to students. It allows students to choose their repayment term at the start of the loan and offers similar benefits to federal student loans. Benefits include withholding payments while in school, on active military service, or as a volunteer for an eligible public service organization. Forbearance is also available in the event of financial difficulties.
Wells Fargo Student Loans offer variable and fixed rates and give borrowers a 0.25% interest rate reduction when they sign up for automatic payments.
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Traditionally known for its credit cards, Discover has entered the field of student loans. It actually offers a variety of student loans suitable for different purposes, from undergraduate studies to MBA degrees, law school and medical residency. These no-cost loans offer deferred repayment options similar to federal loans, so you can defer your payments while you’re still in school.
As with the other companies listed here, Find out about student loans offer variable and fixed APR options. Currently, variable rates are 3.62% to 10.62% and fixed rates are 6.24% to 11.99%. You can also choose your repayment term when you subscribe to the loan.
Discover Loans also have some great additional benefits. They offer borrowers the standard 0.25% interest rate reduction for direct debits. But they also allow a 1% cash reward on every new student loan you take out if you’ve maintained a GPA of 3.0. So, if you need private student loans for several consecutive school years, it could become a valuable benefit.
This bank offers student loans through SunTrust, which also manages federal student loans. Its private student loans come with 7, 10, or 15 year repayment terms, and you can choose your repayment term when you take out the loan.
Federal Union offers variable interest rates from 3.863% to 8.692% and fixed rates from 4.597% to 9.769%. Borrowers can get an interest rate reduction of up to 0.75% by consistently making on-time payments (0.25% reduction), signing up for automatic payments (0.25% reduction %) and making automatic payments from a SunTrust bank account (0.25% discount).
Citizens Bank offers both private student loans and student loan refinances. These free loans allow you to choose your repayment term, either 5, 10 or 15 years. You can also choose your repayment plan while you are in school. Options include full payments immediately, paying interest only, or deferring payments until you fall below half-time enrollment.
As with the other four options listed here, Citizens Bank offers interest rate reduction rewards, including a 0.25% rate reduction when you have a Citizens Bank account before applying for your loan and a rate reduction. 0.25% interest for Automatic Enrollment Payments.
Ascent offers private student loans with interest only, a minimum repayment of $ 25, and deferred repayment options. They offer 5, 7, 10, 12, 15 and 20 year repayment terms and there is no prepayment penalty. Borrowers can qualify themselves or use a co-signer to take out the loan. The company does not offer student loan refinancing.
To encourage direct debit for loan repayment, Ascent offers a payment discount for automatic payments (provided they are successfully withdrawn from your bank each month).
Read more: Ascension review
Each of the companies listed above are direct lenders. These are great choices, but you can find better options by creating multiple apps. The best way to do this is to go through the online student loan market, like Credible. By completing a single application, you will get quotes from up to 10 lenders. You can then choose the lender you prefer and complete the process.
Lenders participating on the site offer loan terms ranging from 5 to 20 years. Variable rate loans start as low as 1.90% APR, while fixed rates start as low as 3.10% APR. There is no charge to use the Credible site, and participating lenders do not charge setup fees or prepayment penalties.
Whether a federal student loan or a private loan is your best option depends on your educational needs, your income, and even your credit. If you don’t have a solid source of income or if your credit is less than ideal, a government loan is probably a better place to start. If you (or your parents, if they take out your student loans instead) have good income or good credit, you may be better able to find what you need from a private lender.
The five banks listed above each offer a number of repayment options, making paying off your student debt easier and more flexible. Whichever route you choose, be sure to fully explore all of your options before signing on dotted lines.