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Private Loan Options

Know Your Facts Before You Borrow

If you determine after reviewing your financial aid package that you need additional student loans beyond the Federal Stafford Loan, a private loan is potentially your next best borrowing option. 

It's not easy choosing a lender, but not doing your research can be a costly mistake. We've made it a lot easier for you by gathering basic facts about private student loans and the lenders available to Iowa students. Review this information and if you have questions call ICAN at (877) 272-4692.

Understanding Private Loans

What about a cosigner?

Traditional-age college students typically will need a creditworthy cosigner to qualify for a private loan.

Fixed or variable interest rates?

Fixed interest rates mean the rate will not change and the standard payment amount will be the same each month for the life of the loan. Variable interest rates may change quarterly or more often depending on the loan terms, meaning the monthly payment could change.

Stated rates or a range of rates?

Some lenders provide their rates before you apply while others set your interest rate after you apply and your or your cosigner’s credit history has been reviewed. Note: For lenders that provide rates after you apply, about 80% of borrowers do not qualify for the lender’s lowest interest rate. Be sure to look at the higher rates offered too.

What kind of lender?

Whether you choose a national or local lender, you’ll work with them for many years. Something to consider is whether the lender keeps their customer support and servicing operations local. 

When does repayment start?

More and more lenders are letting you choose if you want to defer payments, make interest-only payments or begin immediate payments while you’re in school. Tip: Making some sort of payment while in school can reduce the amount of interest paid over the life of the loan.

Are benefits important?

Benefits have to be earned, but interest rate reductions, principal amount reductions and cosigner releases (the ability to release your cosigner from their obligations at some point during repayment) are popular and can make one loan more intriguing to you than another.

Lender Options

The State of Iowa has a nonprofit lender, ISL Education Lending, who offers rates for students and parents below those of national lenders and the Federal PLUS Loan.  ISL Education Lending provides your rate BEFORE you apply and shows you the required credit score for each interest rate offered. Other lenders will set your interest rate AFTER you apply and you or your cosigner's credit history has been reviewed. Not everyone gets the lowest rate stated. Review the rates in the table below and click each lender to learn more about their loan options.

Lender Fixed Interest APRs*
(listed in ascending order of highest rate)
ISL Education Lending** 3.7% - 8.24% APR
SoFi 4.4% - 14.88% APR
College Ave 4.07% - 15.48% APR
Sallie Mae 4.5% - 15.49% APR
  • *Annual Percentage Rates (APRs) were retrieved from the lenders websites on March 2024, for loans where repayment is deferred while the student is enrolled at least half time.
  • ** ISL Education Lending lists specific rates on its website; other lenders provide ranges

Questions to Ask Lenders

  • How is the interest rate for my loan determined? Is the interest rate variable or fixed?
  • In determining the interest rate on a loan, do you consider only the credit rating of the cosigner or does the borrower’s credit also impact the rate received?
  • Are any fees or other charges associated with this loan?
  • What’s your lowest interest rate and fee combination, and how can I get it?
  • Is this combination available for the life of the loan, or only during a limited period of time?
  • Is there a limit on how high the variable interest rate can go?
  • How often is the interest rate adjusted, and how is it determined?
  • Is there a penalty for paying off the loan early?
  • When will my loan repayment period begin?
  • What are the repayment plan options?
  • Is deferment or forbearance assistance available for the loan?
  • Can I defer payments if I go to graduate school?
  • Does the loan include any benefits or interest rate reductions?
  • How do I qualify and how could I lose those benefits?
  • Are your discounts guaranteed or are they subject to change?
  • Would you let me defer or reduce payments temporarily because of economic hardship?
  • Do I need a cosigner to get the loan?
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