Private Student Loan Rates: October 8, 2024—Loan Rates Rise

Rates on 10-year fixed-rate private student loans rose last week. Despite the rise, if you’re interested in getting 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 September 30 to October 5, the average fixed interest rate on a 10-year private student loan was 8.43%. On a five-year variable-rate loan, the rate was 11.91%, according to Credible.com.

These rates are accurate as of September 30, 2024.

Fixed-Rate Loans

The average fixed rate on 10-year loans last week climbed by 0.24% to 8.43%. The week prior, the average stood at 8.19%.

Borrowers currently in the market for a private student loan will receive a higher 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 7.96%, 0.47% lower than today’s rate.

If you were to finance $20,000 in student loans at today’s average fixed rate, you’d pay around $247 per month and approximately $9,667 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable-Rate Loans

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.

Financing a $20,000 five-year private loan at 11.91% would yield a monthly payment of approximately $444. A borrower would pay $6,639 in total interest over the life of the loan. Keep in mind that since the interest rate is variable, it could change monthly.

Know the Benefits of Private Student Loans

While private student loans shouldn’t necessarily be your first financial aid option, they can come with a variety of benefits, including the following:

• You can often borrow as much as you need. Some private lenders let you borrow up to your school-certified cost of attendance minus any previously awarded financial aid.
• You might not have to pay fees. The best private lenders don’t charge origination or disbursement fees, so you won’t have extra charges on your loan in addition to interest.
• Good credit means better interest rates. While your credit score doesn’t matter with most types of federal student loans, it does impact private borrowing. Lenders often offer competitive rates to borrowers with excellent credit or a creditworthy co-signer.
• It’s easy to apply online. Applying for a private student loan is often a quick online process that you can do at any time throughout the school year. Many lenders also let you prequalify for loans online, making it easy to shop around and compare offers from multiple banks.
• International students may be eligible. Some lenders provide loans for international students attending school in the U.S. If you’re an international student, you may have to apply with a U.S.-based co-signer to qualify.
• Your lender may offer useful perks. Depending on the lender, you may qualify for some, from interest rate discounts to cash-back bonuses. Some offer a range of repayment terms, lengthy grace periods, forbearance and deferment options and other borrower protections.

Who Is Eligible for a Student Loan?

To get a private student loan for college or graduate school, you’ll need to meet a lender’s underwriting requirements for credit and income, and other criteria. Here are the main requirements:

• Have a good credit score. Lenders look at your credit, income and other financial characteristics to assess your risk as a borrower. They typically want to see good credit, though specific expectations vary by lender.
• Apply with a co-signer. You may need to apply with a creditworthy co-signer to qualify for a student loan, especially if you’re an undergraduate student without much of a credit history.
• Attend an eligible school. Lenders want to see that you’re enrolled or planning to enroll in a qualifying program at an eligible institution.
• Be at least 18. You’ll need to be the age of majority in your state, which is usually 18 or 19.
• Meet any citizenship requirements. You need to be a U.S. citizen or permanent resident. However, some lenders provide loans for international students, though they may require those borrowers to apply with a U.S. citizen or permanent resident as their co-signer.