If You Really Need a Private Student Loan, Here’s How to Do It Responsibly

If you need to borrow money for college, you’ll want to start with federal student loans instead of private student loans.

What’s the difference? Private loans typically come from lenders like banks or credit unions and tend to be more expensive, while federal loans come from the government and offer flexibility, with options like income-based repayment and loan forgiveness.

However, you might need a private student loan if you can’t borrow enough in federal loans to cover your tuition and other college costs.

If that’s the case, make sure to shop around for a good interest rate. One quick and easy way to do that is through Credible. Credible is a private-student-loan marketplace where multiple lenders will compete for your business.

Whether you’re a student or a parent who’s co-signing a student’s loan, you can type in some basic information and see multiple loan offers within minutes. You can compare loan terms and interest rates, which start at 3.99% APR for variable-rate loans and 4.50% APR for fixed-rate loans. 

It’s important to get the best interest rate you can find, because interest rates for private student loans can rise as high as 14%. A lower interest rate could save you thousands of dollars over the life of the loan.

Checking out these competing loan offers won’t hurt your credit score because Credible only does a soft credit pull to find you your pre-qualified rates.

If you find a loan you like, you can apply directly on the site. Plus, none of your info is shared with the lenders until you’ve chosen a lender and loan option that’s right for you.

So you really have nothing to lose by shopping around. Comparison-shopping is always a good idea, whether you’re looking for a new car, a new phone or a student loan. Credible makes it easy.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.

This article originally appeared on The Penny Hoarder