money 4 Banks That Offer Student Loans
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This article first appeared on the Credible blog.
A few types of lenders offer private student loans, including online lenders as well as traditional banks and credit unions.
Depending on your needs, getting a student loan from a bank might be the right choice for you — especially if you already have a bank account and can qualify for loyalty discounts on a student loan.
Here’s what you should know about banks that offer student loans:
4 banks that offer student loans
Before you take out a student loan, it’s important to compare as many lenders as you can — not only from banks but also from other lenders as well. This way, you can find the right loan for your needs.
Here are a few banks that offer student loans. Keep in mind that Citizens and Sallie Mae are Credible partners while the other lenders listed are not.
You can compare private student loan rates from Credible’s partner lenders, and it won’t affect your credit.
Citizens
Citizens offers student loans from $1,000 up to 100% of your cost of attendance (minus any other financial aid you’ve received) with repayment terms from five to 15 years.
If you already have an account with Citizens, you could get a 0.25% loyalty rate reduction — plus another 0.25% off your rate if you sign up for autopay.
Discover
With Discover, you can borrow $5,000 up to 100% of your cost of attendance with a 15- or 20-year term. Additionally, Discover offers a 1% cash reward to undergraduate and graduate students who earn at least a 3.0 GPA.
PNC Bank
PNC Bank student loans range from $1,000 to $65,000 (depending on your degree) with terms from five to 15 years. If you sign up for autopay, you could get a 0.50% rate discount — higher than the typical 0.25% offered by many other lenders.
Sallie Mae
With Sallie Mae, you can borrow $1,000 up to 100% of your school-certified cost (minus any other financial aid you’ve received) with a 10- or 15-year term.
Additionally, if you apply with a cosigner, you can apply for cosigner release after just 12 months of consecutive, on-time payments.
Banks vs. other student loan lenders
While banks tend to be similar to other types of student loan lenders, here are a few differences to consider:
Fewer options for bad credit: You’ll generally need good to excellent credit to get approved for a private student loan. But some banks may have more stringent credit qualifications. This might make it hard to qualify if you have poor or fair credit.
Might perform a hard credit pull: Some banks, such as Sallie Mae, perform a hard credit check before you can see your personalized rates. This hard credit pull can have a slightly negative effect on your credit score. Online lenders, on the other hand, tend to use only a soft credit pull before showing you the rates you might qualify for and will save the hard credit pull for when you apply for a loan.
Longer application process: Depending on the bank, it might take longer to get a student loan in comparison to an online lender.
Tip: If your private student loan is taking a while to process and you need money quickly, you could consider applying for an emergency personal loan to help cover expenses in the meantime. Once you get your student loan funds, you can use them to pay off the personal loan. Just keep in mind that you typically can’t use a personal loan to pay for education costs like tuition and fees. But you can typically use a personal loan to pay for housing, groceries, and other living expenses.
If you decide to take out a private student loan to pay for college, remember to compare as many lenders as you can — including banks and other types of lenders — to find the right loan for you.
This is easy with Credible: You can compare your prequalified private student loan rates from multiple lenders in two minutes.
How to take out student loans
If you’re ready to get a student loan, follow these four steps:
Fill out the FAFSA. If you need to pay for school, start by completing the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA information to determine what federal financial aid you’re eligible for. Your FAFSA results might also qualify you for school-based scholarships or grants.
Apply for scholarships and grants. It’s a good idea to apply for as many scholarships and grants as you can. Unlike student loans, scholarships and grants don’t have to be repaid — meaning they’re essentially free money you can use for school.
Take out federal student loans. If you need to borrow money for school, starting with federal student loans is usually a good choice. This is mainly because you’ll have access to federal student loan benefits and protections, such as income-driven repayment plans and student loan forgiveness programs. To apply for federal student loans, you’ll need to fill out the FAFSA.
Use private student loans to fill any gaps. If you’ve exhausted your scholarship, grant, and federal student loan options, private student loans could help fill any financial gaps left over. Like federal student loans, private student loans can typically be used for a variety of education programs, such as trade schools, online colleges, and community colleges.
Taking out student loans with a cosigner
You’ll typically need good to excellent credit to qualify for a private student loan. A good credit score is usually considered to be 700 or higher. This means you might have a hard time getting approved if you have a lower credit score than this or haven’t established a credit history yet.
If this is the case, here are a couple of options to consider:
Apply with a cosigner. Having a cosigner with good credit can greatly improve your chances of getting approved for a student loan. In fact, most borrowers use a cosigner when applying for private student loans. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
Build your credit. If you can wait to take out a loan, you could spend some time building your credit before applying in the future. There are a few ways you can possibly improve your credit, such as making on-time payments on all of your bills, paying down credit card balances, or getting a credit-builder loan.
Keep in mind that your credit also affects the interest rates you’ll qualify for. In general, the higher your credit score, the lower your rate. Having a cosigner with good credit might also help you get a better rate, which can save you money on your overall loan cost.
For example: Say you qualify for a $25,000 student with a fixed interest rate of 7% and a 10-year repayment term. With these terms, you’d end up paying $290 per month with a total repayment cost of $34,833.
But if you applied with a cosigner for the same 10-year term and were able to get a 5% interest rate, you’d pay $265 monthly with a total cost of $31,820 — meaning you’d save $3,013 overall by having a cosigner.
Whether you apply with a cosigner or not, it’s important to consider how much a student loan will cost you so you can be prepared for any added expenses. You can find out how much you’ll owe over the life of your federal or private student loans using Credible’s student loan calculator.
How to pick the best student loan for you
To find the best student loan for you, you’ll need to shop around and compare your options from as many lenders as you can. Consider several important factors as you do your research, including:
Interest rate: The interest rate on a loan plays a major role in determining how much you’ll pay for it over time. You’ll also need to decide whether you’d prefer a fixed or variable rate. A fixed rate will remain the same over the life of your loan, which means your payment won’t ever change. A variable rate might be lower in comparison — but it can also fluctuate over time.
Repayment term: The shorter the term, the less you’ll pay in interest. Because of this, it’s usually a good idea to choose the shortest term you can afford.
Cosigner release: Some lenders allow cosigners to be released from the loan once you’ve made on-time payments for a certain amount of time. If you’d like to remove your cosigner from the loan in the future, be sure to check whether the lender offers cosigner release.
Discounts: Depending on the lender, you might be able to take advantage of discounts. For example, many lenders provide rate discounts if you sign up for automatic payments. Others offer loyalty discounts if you already have an account with them.
If you’re ready to start comparing lenders, Credible can help — you can see your prequalified private student loan rates from multiple lenders after filling out a single form.
About the author: Miranda Marquit is a mortgage, investing, and business authority. Her work has appeared on NPR, Marketwatch, FOX Business, The Hill, U.S. News & World Report, Forbes, and more.
