Rates on 10-year fixed-rate private student loans jumped up last week. Despite the rise, if you’re interested in getting a private student loan, you can still get a relatively low rate.
From September 2 to September 7, the average fixed interest rate on a 10-year private student loan was 7.95% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace. On a five-year variable-rate loan, the average interest rate was 8.67% among the same population, according to Credible.com.
These rates are accurate as of September 2, 2024.
Fixed-Rate Loans
The average fixed rate on 10-year loans last week rose by 0.36% to 7.95%. The week prior, the average stood at 7.59%.
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 7.85%, 0.10% lower than today’s rate.
A borrower who finances $20,000 in private student loans at today’s average fixed rate would pay around $242 per month and approximately $9,055 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.
Variable-Rate Loans
Last week, rates on variable five-year student loans moved up, reaching 8.67% from 8.38% the week prior.
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 8.67%, you’d pay approximately $412 on average per month. In total interest over the life of the loan, you’d pay around $4,718. Of course, since the interest rate is variable, it could fluctuate up or down from month to month.
Who Is Eligible for a Student Loan?
Specific student loan requirements will vary by lender, but you typically need to be a U.S. citizen or qualifying non-citizen who meets the average age requirement in your state. Make sure you’re enrolled in or planning to enroll in an eligible program at a qualifying institution.
Moreover, you must meet the lender’s credit, income and debt-to-income ratio requirements. Most lenders look for a good credit score of 670 or higher, though specific requirements vary.
Some lenders require or prefer that you apply with a co-signer. A co-signer is a parent or a trusted adult who agrees to repay the loan if you miss payments. Some lenders allow a co-signer release after a certain period of on-time payments.
Who Is Eligible for a Student Loan?
Specific student loan requirements will vary by lender, but you typically need to be a U.S. citizen or qualifying non-citizen who meets the average age requirement in your state. Make sure you’re enrolled in or planning to enroll in an eligible program at a qualifying institution.
Moreover, you must meet the lender’s credit, income and debt-to-income ratio requirements. Most lenders look for a good credit score of 670 or higher, though specific requirements vary.
Some lenders require or prefer that you apply with a co-signer. A co-signer is a parent or a trusted adult who agrees to repay the loan if you miss payments. Some lenders allow a co-signer release after a certain period of on-time payments.
How To Compare Private Student Loans
First, take a look at the loan’s overall cost. Consider both interest rate and fees. Also, look at the type of help each lender offers if you’re not able to afford your payments.
Keep in mind that the best rates are only available to those with good or excellent credit.
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.
The Rate You’ll Receive
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.
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