Frequently Asked Questions About Private Student Loans in PA
Are you getting ready to enter higher education but are worried about the cost? Undergraduate and graduate loans can be intimidating and confusing, but the possibilities they offer are life-changing. As a private student loan lender, we want to help you make the best possible financial decisions for your future.
We have years of experience helping young people on their journey to find student loans in PA and are familiar with the most common fears and worries that future, current, and past students experience. Wherever you are in your loan journey, you will find the answers to your most pressing questions here. So read on and then move forward with confidence in your future!
What Are Private Student Loans?
Private student loans are student loans offered by private lending institutions to help pay for college education costs. Your options for easy private student loans in PA come in various forms, from traditional banks and credit unions to large private student loan providers like Sallie Mae.
These lenders offer loans for a simple reason—students are investing in their future income potential, and these lenders are investing in the students.
FAQs For Starting Your Private Student Loan Journey
Now that you know more about private student loans, you might be interested in their potential. Taking away the stress of tuition is very attractive—but where do you start?
How Do I Apply for a Private Student Loan?
If you haven’t applied for student loans before, you might find the thought of them overwhelming. But when you work with a lender like us, you’ll have an easy private student loan process with a hassle-free application. To find the best loan provider for you, follow these simple steps:
- Research and compare lenders – Make a list of the four to five lenders that sound the most attractive to your situation. Most lenders will give a range for their rates, as well as disclose their general terms and offers.
- Check for pre-qualifications. – Some lenders will allow you to pre-qualify without a full credit check.
- Gather your information – Private loans will require your personal information, including your Social Security Number (SSN), financial forms, employment information, and the loan amount you are seeking. You will also need your co-signer’s information if you’ll need one.
- Apply – Most private lenders have a similar application process, so you should become familiar with it after the first few.
- Compare offers – If and when you are approved, you will receive a notification from the lender alongside an offer. You should use this to compare and contrast monthly payments, interest rates, and perks like bonuses for high GPAs or long post-graduation grace periods.
Who is Eligible for a Private Student Loan?
Like other private loans, private student loan eligibility is open to nearly anyone. However, the quality of the loan will depend on a few factors, such as the lender in question and your personal credit history. Some lenders are more willing to provide loans to those with low credit scores.
What is the Minimum Credit Score for a Private Student Loan?
Because most students are younger, it is very common to have a low or even no credit score when seeking student loans. This is why credit is less of a strict barrier to student loans—it’s common for lenders of private student loans in PA to be more open to offering loans to young people who are still building credit. Here at Lanco FCU, we will help borrowers with credit below 620 find loans and even provide the option of building credit while borrowing a private student loan.
Typically, you need a credit score of at least 620 to be considered for private loans without a co-signer. Many lenders offer loans to those with bad credit scores, though these loans will have a much higher annual percentage rate (APR).
Can I Get a Student Loan With No Credit or Bad Credit?
Yes, you can get a student loan without a credit score. Bad credit student loans will typically have higher variable interest rates and monthly payments, just like any other loan. However, if a co-signer is willing to help you apply their credit score, it will help you get a better, lower interest rate.
Private student loans are often a good way to build a credit score for borrowers with no credit history. We at Lanco FCU offer private student loans in PA with the option to make small or interest-only payments while attending school and building credit while lowering the total loan cost.
What Student Loans Have Guaranteed Approval?
There is no such thing as a student loan with guaranteed approval for the borrower. However, Because the government backs federal loans for undergraduate students, they are ‘guaranteed’ for lenders to receive repayment. It’s important to remember that these loans often do not cover the entirety of tuition. That’s why so many prospective students turn to private loans to fill the gaps.
FAQs When Thinking About Federal Student Aid and Private Student Loans
Federal student aid is likely the first place you went to after getting into a school. However, federal student aid and private student loans in PA have many differences that you should be aware of. Both are extremely valuable tools for your future success, so take the time to learn more about both.
How Do Private Student Loans and Federal Student Loans Differ?
At a basic level, federal student loans are funded by the government, while private student loan lenders are private entities. The differences become much more notable when comparing interest rates, eligibility, and payment timelines.
Federal student loans are attractive to many because they have consistent terms and conditions set by law. They also come with many benefits, including fixed interest rates and income-driven repayment plans. There are four types of federal student loans:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
Direct Subsidized Loans are based on financial need, while Unsubsidized and PLUS loans are not. PLUS loans require a credit check and will require additional requirements for those with poor credit. Lastly, consolidation loans are provided when you have taken multiple loans and want to combine them under a single loan.
Can I Apply for Both a Federal and a Private Student Loan?
Yes, in fact many financial advisors recommend pursuing both types of loan in addition to any scholarships and grants that might be available. Federal student loans are typically easier to receive and have benefits as discussed above. However, federal loans rarely cover the total cost of tuition, even when not including room and board.
Depending on factors like your dependency status and the school year you are entering (1st year vs. 4th year) you might only be able to borrow as little as $5,500 in federal aid. A Private student loan can be an easy and helpful way to fill out your finances and allow you to pursue your degree in comfort.
Should I Apply for Scholarships and Grants Before I Apply for Student Loans?
A standard recommendation is that you should apply for all of your potential scholarships, grants, and federal student loans before you turn to private student loans. And when you do turn to private lenders, such as banks or credit unions, do your research and consider your options carefully.
FAQs for Paying Back Private Student Loans
After graduation, you’ll be experiencing a whirlwind of emotions and new difficulties. Applying to new jobs, considering graduate school, and, of course, the new stress of paying back your federal and private student loans. You suddenly have a new batch of questions about how to handle this debt.
Are There Forgiveness Options for Private Student Loans?
No, loan forgiveness programs are only offered by the federal government and only apply to federal student loans. If any part of your debt is associated with federal loans, then student loan forgiveness is a very useful tool for decreasing your debt burden.
Can You Refinance Private Student Loans?
Lenders often offer a refinancing service, but it is not guaranteed. Check with your lender for information about easy private student loan refinancing or consolidation. Tools like loan calculators can provide valuable insights into your financing decisions. Refinancing can also simplify the loan process, condensing and consolidating your loans into a single payment.
Should I Consolidate my Student Loans?
Consolidating your student loans into a single monthly payment is especially useful financially, as is the opportunity to refinance your loan term and decrease interest payments.
However, it is not typically recommended that you consolidate federal student loans. Consolidation essentially uses a single private loan to pay off your other loans, which means you will lose access to the benefits and programs that federal borrowers receive.
For more advice and services to help you optimize your student loan repayment plan, we often suggest reaching out to LendKey to those entering repayment.
Come to Lanco Federal Credit Union for Any Private Student Loan Concerns
Student loans can be intimidating and are a large commitment to make. But the benefits of an education are talked about constantly. You shouldn’t take these loans lightly, but you shouldn’t let financial concerns steer you away from taking steps toward a better future. Knowing is half the battle, and taking these answers with you will help you make better decisions about your loans.
If you have any questions that are more specific to your situation or that we didn’t cover here, don’t hesitate to call Lanco Federal Credit Union—Lancaster, PA’s premier financial institution. We are here to support the community via our private student loans in PA and our financial know-how. We want to help you find opportunities you won’t find anywhere else—call today!