Private Student Loan Rates: May 29, 2024—Loan Rates Move Up

Rates on 10-year fixed-rate private student loans moved up last week. Despite the rise, if you’re interested in getting a private student loan, you can still get a relatively low rate.

According to Credible.com, from May 20 to May 25, the average fixed interest rate on a 10-year private student loan was 9.11%. It was 10.87% on a five-year variable-rate loan. That’s for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace.

These rates are accurate as of May 20, 2024.

Related: Best Private Student Loans

Fixed-rate Loans

The average fixed rate on 10-year loans last week jumped by 0.54% to 9.11%. The week prior, the average stood at 8.57%.

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 7.82%, 1.29% lower than today’s rate.

If you were to finance $20,000 in student loans at today’s average fixed rate, you’d pay around $255 per month and approximately $10,545 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable-rate Loans

Average variable rates on five-year loans moved up last week, from 7.47% on average to 10.87%.

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.

Financing a $20,000 five-year private loan at 10.87% would yield a monthly payment of approximately $434. A borrower would pay $6,013 in total interest over the life of the loan. Keep in mind that since the interest rate is variable, it could change monthly.

Related: How To Get A Private Student Loan

Applying for a Private Student Loan

Before you look to a private student loan, consider a federal student loan as your first option. The interest rates on federal student loans are generally lower. Federal student loans also tend to have far more generous repayment and forgiveness options. Yet, if you’ve reached the borrowing limits for federal student loans or if you’re ineligible for them, private student loans can be a good solution.

Getting a private student loan generally involves applying directly through a non-federal lender, such as a bank, credit union or online entity. You may also be able to get a private student loan through a nonprofit organization, state agency or college.

It’s important to note that you’ll need a qualified co-signer if you have limited credit history, as undergraduates often do.

When applying for a private student loan, take into consideration the following:

  • Your qualifications. Private student loans are credit-based. Lenders typically require a credit score in the higher 600s. This is where having a co-signer can be particularly beneficial.
  • Where to apply. You can apply directly on the lender’s website, via mail or over the phone.
  • Your options. Look at what each lender offers and compare the interest rate, term, future monthly payment, origination fee and late fee. Also, check to see if the lender offers a co-signer release so that the co-borrower can eventually come off of the loan.

Shopping for 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.

Remember, those with good or excellent credit typically get the best rates.

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.

How Your Interest Rate Is Determined

Lenders offering private student loans generally offer both fixed and variable interest rates. These rates are, in part, based on your creditworthiness. Generally, the higher your credit score, the lower the interest rate you’ll receive. But credit history, income, the degree you’re working on and your career can factor into the interest rate you receive as well.

More From Advisor

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.