Understand Private Student Loans

With any student loan—private or federal—you have to pay back the money you borrowed with interest. That means you’ll pay back more than the amount you borrowed. Loans are legal agreements, so be sure to understand your student loan and its terms before signing. If something isn’t clear to you, just ask.

What to know about private student loans

Private student loans are offered by banks and credit unions—not the government.

The government offers financial aid and federal loans. Private student loans can help you pay for college after you’ve explored scholarships, grants, and federal loans.

Private student loans are credit-based.
That means the lender looks at your history of borrowing money and paying it back on time. They want to know how creditworthy, or how responsible you are with credit, before approving your student loan application.

Your private student loan interest rate depends on multiple factors.
The interest rate you’re given depends on your creditworthiness—your history of borrowing and repaying money. Depending on your lender, it may also be impacted by some of the loan-related choices you make, like the type of interest rate you choose and how you decide to pay the loan back.

Lenders may allow you to choose a fixed or variable interest rate.
fixed interest rate stays the same for the life of the loan. This means you’ll have predictable monthly student loan payments. A variable interest rate may go up or down due to an increase or decrease to the loan's index. Variable interest rates usually start out lower than fixed rates, but can change, so your monthly student loan payments may vary over time.

You can apply for a private student loan with a cosigner.
Many college-bound high school students haven’t had time to build up their own credit. That’s why they apply with a cosigner, a creditworthy adult who shares the responsibility of the student loan.

You have options.
Not all private student loans are the same. There are different types of interest rates, repayment options, and more. Be sure to read all disclosures provided to you, so you can fully understand your student loan.

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footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

footnote 1. For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.