02 Jun Discover the Differences in Private Student Loans
Now that most high school seniors have decided which college they will attend in the fall, the final pieces of the puzzle can fall into place. Families should know what the expected tuition and related costs will be; they will probably have a financial aid offer in place, and should know if their student will receive any outside scholarships. If there is any gap between expenses and financial aid/scholarships, the remaining amount of money must come from savings or other resources.
Most likely, the family will turn to student loans. After determining how much is available through the federal student loan program, the next option to research is private student loans. While federal student loans are funded by the federal government and have standard terms and conditions for all borrowers, there is a great deal more latitude in private student loans. These loans are made by a lender such as a bank, credit union, state agency, or a school, and the terms and conditions can vary from one lender to another. Here are some of the things you should look out for when considering private student loans:
• Fees: Check the contract details very carefully when signing for a private student loan. Some companies will add on fees which could increase your out-of-pocket costs or accrue interest over the life of the loan. Discover Student Loans is a good example of a private lender that does not require any loan application fees, origination fees, or late fees.
• Interest Rates: Interest rates will vary among lenders and could make a difference in the ultimate amount of money you will repay. Make sure you understand whether the interest rate you are agreeing to is fixed for the life of your loan, or if it will vary as market interest rates change. Discover currently offers both types of interest rates so you can choose the approach that is best for your specific financial situation.
• Coverage: Check to determine if your private student loan covers 100% of your school-certified college costs such as tuition, housing, books and other expenses. Discover will allow you to borrow up to 100% of your cost of attendance minus other financial aid.
• Service Center Location: When you have a question about your student loans, you want to be able to understand the answer. All of Discover’s Student Loan Specialists are based in the U.S. and are available 24 hours a day to assist you.
• Repayment Options: Some private lenders may require you to start repaying your student loans while you are in college, while Discover offers the choice of in-school or deferred repayment options.
• Rewards: Everyone likes to get a little something extra. With Discover, if you earn a 3.0 GPA or better, you can receive a full 1% cash reward on each new student loan.
Never rush into a decision about your student loans without first checking your options. It might pay to discover the differences there are in private student loans.