• Paying for College
  • Ways to Pay for College

Investigating Private College Loans

Many families find that the loans in their aid package fall short of meeting their need. That's when the wide world of private college loans opens up.

Check Out Credit Unions

When it comes to student loans, nonprofit credit unions can be overlooked. But they are very active in the student loan market, thanks to low rates and little or no fees. Look for credit unions in your home area or near the college's location.

Do your homework before choosing a private lender. The more you shop around, the more likely you are to find a good deal.

Starting Your Loan Search

Private college loans are widely available at banks and credit unions. You can also search online for student loan companies that take online applications.

Comparing Offers from Private Lenders

The Project on Student Debt suggests that borrowers compare lenders by asking the following questions:

Interest rate

  • What is the lowest interest rate and fee combination that you offer? Is the rate for a limited period or for the duration of the loan?
  • Is there a limit on how high the rate can go? How often is the rate adjusted, and how is it determined? What rate can I get on a fixed-rate loan?


  • When do I have to start making payments? How long will I be repaying the loan? Is there a penalty for paying off the loan early?
  • If I do not make payments while in school, how much will I owe when I do start making payments?
  • If I have difficulty making payments, may I defer or reduce my payments temporarily? Under what circumstances and for how long?


  • How might I lose my on-time payment discount?
  • How many of your borrowers actually get the discounts you offer?
  • Are your discounts guaranteed, or are they subject to change later?

Typical Terms for a Private College Loan

The amount students may borrow may not exceed the total cost of educational expenses minus any financial aid the student receives. (If the loan exceeds this amount, the excess will reduce the amount of financial aid offered by the college.)

The fees, interest rates, and other terms of private college loans are tied to the credit qualifications of the borrower and cosigner, the number of years allowed for repayment, and when repayment begins. In all cases, interest begins accruing immediately—even if repayment is deferred.

Note: Financial information provided on this site is of a general nature and may not apply to your situation. Contact a financial or tax advisor before acting on such information.

What's Next?

See Borrowing Options for College to explore all the ways you can borrow for college.

See Federal Education Loans to learn about the types of loans that might appear in your financial aid award.

Use the EFC Calculator to see what your family might be expected to pay out-of-pocket for college.

Use the Student Loan Calculator from 1FBUSA to find out how student loans may affect your financial future. See what your loan payments will be compared with how much you can afford to pay based on your expected salary after graduation.