Private education loans are specific consumer loans in the student's name offered by private lenders to help pay education expenses for the year.
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
In contrast, private loans are made by private organizations such banks, credit unions, and state-based or state-affiliated organizations, and have terms and conditions that are set by the lender. Private student loans are generally more expensive than federal student loans.
Our Office of Financial Aid recommends utilizing Federal Direct Loans, Federal Direct PLUS Loans, and WLC Payment Plans first, before borrowing a private education loan.
Private Education Loan Features:
- Cosigner is usually required
- Must undergo credit check
- Variable interest rates may change monthly or quarterly
- Fixed interest rates offered by some lenders
- Line of credit loans offered by some lenders
Tips for Selecting a Private Education Loan
Where can you find a Private Education Loan?
Some banks and credit unions offer private education loans. You can borrow from a lender of your choice or from a lender listed on the WLC Private Loan Options site.
WLC Private Loan Options
- Citizens
- College Ave Student Loans
- Earnest
- Minnesota SELF Loans (must be a Minnesota resident)
- Sallie Mae
- SoFi
What are the interest rates and fees charged private education loans?
Each lender determines the interest rate and fee structure for its own loan programs. Most lenders do not charge fees at this time. Many lenders do offer both fixed rate and variable rate loans. They will typically base the interest rate on a benchmark such as prime or LIBOR plus a specific percent margin. For variable rate loans, as prime or LIBOR go up or down, so will your interest rate.
When does repayment begin and how long does it last?
Many private education loan programs start the payments 6 months after college graduation (or after leaving school). Interest accrues while you are still in school. Typical repayment plans last anywhere from 7-25 years. You will save money by making interest-only payments, by making $25 monthly payments, or by starting immediate repayment on the principal and interest of the loan while you are in school. To save even more money, consider paying the loan off as fast as possible!
Remember to borrow only what is needed when using a private education loan. Compare loan programs to determine the program that is best for you.
Applying for a Private Education Loan
- Determine the amount of loan needed for the entire school year. Consider how much you will pay out of pocket to keep your loan amount lower. Be sure to borrow your maximum Direct Subsidized/Unsubsidized Loans first.
- Determine the lender and private education loan that you plan to use.
- Apply through the lender's website. Complete the requirements of the lender for that loan program.
You can borrow from a lender of your choice or from a lender listed on the WLC Private Loan Options site.