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private loans vs federal loans


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  • 3 weeks later...

I have no experience on this...(I am researching these loans too, I begin PA school in August)

That said, I was told by my financial aid counselor to look into all types of loans, both federal and private.  Only look at bank loans as other lenders are probably not legit.  Also consider that private loans will offer you interest rates based on your credit score, so you will not get the same interest rate as the person next to you.

As always, I would check to make sure that you don't have to start paying off the interest immediately. Hopefully they can give you a grace period until after you graduate.

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Is there a reason you wouldn't consider federal Stafford loans and supplement that with private loans? At any rate, we (meaning my daughter with me co-signing) are using Discover loans (previously Citibank) to supplement Stafford. They have been very helpful and we liked .the rates (which were lower with us co-signing, especially since my daughter had not previously established much credit). Having good credit, needless to say, is important with private loans. If you are older, more established, and have been responsible with credit in the past, you should be good too go. Unfortunately, many millennials don't establish a lot of credit until later in life. If you are already loaded down with undergrad loans, car payments and credit card bills, it may be a different story. My daughter didn't have much of a credit history but, at least, started out debt free and no black marks.

 

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I used Citibank loans in undergrad and got a rate of 5% with my dad cosigning. This rate lasted until I paid it off, about 15k loan I think. Like others have said if you have good credit or know of someone who has good credit and willing to cosign you're good to go. I had a friend who couldn't get a co signer and ended up with a interest rate of 13%. Big difference.

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  • 2 weeks later...
  • 1 month later...

Stafford loans offer everyone the same (lousy) rate and just about anyone without a criminal history can qualify. With private loans your rate will likely depend on credit history. Discover (previously Citibank) is one good source. Always ask if you are getting their best rate. If your credit history, or lack of credit history, is raising your rate, see if you can get a co-signer. Discover's best rates are below 6%. If you allow them to deduct $25/mo from your bank account as a periodic interest payment they will reduce your rate by 0.25%

 

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