July 16, 2024—Loan Rates Slip – Forbes Advisor – Technologist

Rates on 10-year fixed-rate private student loans inched down last week. If you’re interested in picking up a private student loan, you can still get a relatively low rate.

For borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace from July 8 to July 13, the average fixed interest rate on a 10-year private student loan was 7.29%. On a five-year variable-rate loan, the rate was 10.94%, according to Credible.com.

These rates are accurate as of July 8, 2024.

Related:  Best Private Student Loans

Fixed-Rate Loans

Last week, the average fixed rate on 10-year loans slipped by 0.19% to 7.29%. The week prior, the average stood at 7.48%.

Borrowers currently in the market for a private student loan will receive a lower rate than they would have at this time last year. At this time last year, the average fixed rate on a 10-year loan was 7.45%, 0.16% higher than today’s rate.

If you were to finance $20,000 in student loans at today’s average fixed rate, you’d pay around $235 per month and approximately $8,226 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable-Rate Loans

Last week, the average rate on a variable five-year student loan fell to 10.94% on average from 11.17%.

In contrast to fixed rates, variable interest rates fluctuate over the course of a loan term. Variable rates may start lower than fixed rates, especially during periods when rates are low overall, but they can rise over time.

Private lenders often offer borrowers the option to choose between fixed and variable interest rates. Fixed rates may be the safer bet for the average student, but if your income is stable and you plan to pay off your loan quickly, it could be beneficial to choose a variable loan.

If you were to finance a $20,000 five-year loan at a variable interest rate of 10.94%, you’d pay approximately $434 on average per month. In total interest over the life of the loan, you’d pay around $6,055. Of course, since the interest rate is variable, it could fluctuate up or down from month to month.

Related: How To Get A Private Student Loan

How Lenders Determine Your Rate

The rate you receive depends on whether you’re getting a fixed or variable loan. Rates, in part, are based on your creditworthiness—those with higher credit scores often get the lowest rates. But your rate is based on other factors as well. Credit history, income and even the degree you’re working on and your career can play a part.

Getting a Private Student Loan

Before you look to a private student loan, consider a federal student loan as your first option. The interest rates on federal student loans are generally lower. Federal student loans also tend to have far more generous repayment and forgiveness options. Yet, if you’ve reached the borrowing limits for federal student loans or if you’re ineligible for them, private student loans can be a good solution.

Getting a private student loan generally involves applying directly through a non-federal lender, such as a bank, credit union or online entity. You may also be able to get a private student loan through a nonprofit organization, state agency or college.

If you’re an undergraduate with limited credit history, you’ll generally need to apply with a co-signer who can meet the lender’s borrowing requirements.

Here’s what to consider when applying for a private student loan:

• Make sure you qualify.Private student loans are credit-based, and lenders typically require a credit score in the high 600s. This is why having a co-signer can be particularly beneficial.
• Apply directly through lenders.You can apply directly on the lender’s website, via mail or over the phone.
• Compare your options.Look at what each lender offers and compare the interest rate, term, future monthly payment, origination fee and late fee. Also, check to see if the lender offers a co-signer release so that the co-borrower can eventually come off of the loan.

How To Compare Private Student Loans

When shopping for a private loan, consider the overall cost of the loan, including interest rate and fees. You may also want to consider the type of assistance each lender offers if you’re not able to make your loan payments.

Remember, those with good or excellent credit typically get the best rates.

Experts generally recommend that you borrow no more than what you’ll earn in your first year out of college. While some lenders cap the amount of money you can borrow each year, others don’t. When comparing loans, figure out how the loan will be disbursed and what costs it covers.