Best Private Student Loans of 2024 : Paying for college is a stressful process. That’s why we do what we do. Now, when it comes to paying for college, ideally, we want to avoid student loans, but in some situations, they might be inevitable. Now, shopping around can be critical when it comes to choosing who you want to borrow the money from. In fact, we’ve seen families where they did not shop around and they ended up with a really high APR, which I’ll explain what that is in just a moment. I’m going to cover in this video the best private lenders, if that is something that your student needs to look into. Now make sure you hit subscribe, because every single week we are releasing a new strategy for paying for college without student debt. So even if your student has to borrow for this semester, they may not have to for future semesters if you follow these suggestions. Hey there, my name is Jawson Pierson, Founder of the Scholarship System and Debt Free Degree Lab, and this is what we do. We help families avoid student debt. Now that said, of course, I have to realize that some families, they just need the money right now.
And in that situation, I want to make sure that at least you know who it’s best to lend from. Now, again, there are so many different ways to pay for college. Student loans is just one of these. In my opinion, it should be one of your last choices when it comes to paying the bill. Now, if you’re curious about how to secure scholarships so that your student can avoid that student debt, we are going to link to a free training in the description on my six steps to securing six figures in scholarships. We’ve helped thousands of families across the country receive money that does not involve debt in order to pay that college bill. But that said, if your student is looking at student loans, before I get into private student lenders, I do want to point out that you always want to max out federal loans first. I’m going to link also to our student loans videos. One specifically talks about unsubsidized loans, which are certainly better even than private loans, and even better than those are subsidized loans. I’m going to link to that video where I describe all this verbiage, all the different types of loans in the description.
So don’t miss out on that. Now, do me a favor and comment below. What are some unique strategies that you’ve heard of for paying for college? If I see any that I haven’t covered yet, I might just create a video on it. So comment below with some ideas, and maybe it’ll actually help get the ball rolling when it comes to avoiding student debt. Let’s get into the private student lenders. First, I want to talk about how private student loans are different from federal loans. First and foremost, of course, it is a private company that’s lending the money versus the government. With that, there may be less flexibility. For example, when COVID struck, federal government immediately froze payments, froze loan interest rates, and yet private companies, it took them a little bit of time before they followed suit. But typically, the terms are just more flexible when it comes to federal government versus private loans. The best way to view these are basically personal loans because functionally, they are more similar to those than federal loans. Now, one thing is that the money that is borrowed can typically be used for any kinds of expenses, including those beyond the bill.
Say, your student needs a laptop or a public transit pass or money for rent, it can be used for the bill, but then they could actually receive overage money from the loan in order to pay those outside expenses. Now, the last and one of the most challenging points for some families is that private student loans do indeed typically require a cosigner, where federal loans do not. So a cosigner is someone that signs on the dotted line along with the student to guarantee payment back. I want to stress this that when you are the cosigner, you are responsible if they decide not to pay. I do want to point that out. In fact, I have a video on whether or not a cosiner is needed. If you want to learn more about cosigning, you can check out that video as well. All of these resources will be linked in the description. Now, if you do cosign or if you get a cosiner for your students, the private lenders do require a decent credit rate. I’ll share what they are below with our favorite lenders, but typically you’re looking at for sure over a 600. Now, when it comes to private lenders, also they are the ones that set the rules on what they are lending.
This is why it’s important to shop around. Things that you want to take into consideration before I share my favorite lenders is first APR. That’s a term that you’ll see often. This stands for annual percentage rate. This is what is used for calculating the interest that is paid on the money. Of course, the lower, the better. This is typically also fixed for the life of the loan, which means that it will not change. You don’t have to worry about it increasing on your student later down the road. If it’s variable, then typically that would mean that it can vary. It can be changed after a certain period of time. Now, with interest rates being at historical lows in recent years, you can pretty much assume over the next few years that they would only go up. We do want to avoid any variable loan rates, but typically they are fixed. The next requirement will be credit score requirements, which can vary company to company. Then there are enrollment requirements. For example, some student loan lenders will require your student to be a full-time student, meaning they’re taking at least 12 credit hours per semester. Another thing to consider is how long the loan can be.
Are they flexible on payment times? Does it have to be 10 years? Can it be longer than that, shorter than that? Off of that, actually, something else to consider is, can it be paid back early if your student is in a great situation without any penalties? Looking at how long the money has to be paid back, what’s that term? But also if you decide to pay back early, is that an option for your student? Another thing that you’ll want to look into is their cosine or release, which means that if you cosine or if someone else cosines, can they be removed from the loan later down the road? Some student loans do not allow this. Another thing to consider are fees. Do they have an initial setup fee? Do they have any other fees down the road? Late fees, bounce check fees, whatever fees there are. When you are comparing lenders, that is absolutely something you want to look into because you don’t want any surprises down the road. And lastly, something you may want to consider is, are there refinancing terms? Is there any restrictions, again, for paying off early or anything like that, that would affect if you decide to refinance down the road.
Maybe say the interest rates do come down somehow, then you would want that as an option. So that’s something to consider as well. Let’s get into a few specific lenders. Now, for me, our lenders, they can change. We try to keep up with this list and keep it most recent. If you want to see our latest favorite lenders, go to thescholarshipsystem. Com/lenders. They will have links to the ones I’m about to describe, but also we always keep that updated so you can see the latest companies. Let’s get into the first one. The first one is a name that you’ve probably heard, and that is Sally May. Sally May is a huge student loan company. Now, they have a fixed annual percentage rate, APR, from 3.5% all the way up to 12.6%. Again, of course, the lower, the better. Now, again, that APR is going to be used to calculate how much interest your student has to pay. Again, the lower, the better. Now, a quick note about APR. This rate is actually, it can vary based on different qualifications. For example, the higher the credit score, maybe the lower the rate, or maybe a full-time student, there’s different factors that they use in order to determine what your student’s borrowing rate will be.
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Now, Sally May requires a credit score around the mid 600 and above, and they will cover cost of attendance minus any aid. Cost of attendance is the total bill, not just tuition. It’s tuition, room and board, books, fees. The school has their own estimate of what the total cost is, and then they would subtract any aid that your student received. Now, here’s a bonus with Sally May, and that is that cosiners actually can be removed from this as long as the student makes 12 consecutive payments on time. That is a great term for those of you that are considering cosigning, but you don’t really want to be on the hook long term, this could be a great option. Now, the next lender is one that we’ve followed for many years, and that is LenKey. They have a fixed APR between 3.99% and 8.49%. That top range is a little bit lower than Sally May. Actually, that four percentage points can make a huge difference. It’s quite a bit lower than Sally May. They also allow awards up to the cost of attendance minus aid. A bonus for them is that forbearance of 18 months, that is a longer period than most student loans offer.
