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Kids and Money: In the market for private student loans? Make sure you shop around.

Tribune Content Agency logo Tribune Content Agency 8/12/2021 Steve Rosen, Tribune Content Agency
a desk with a computer on a table: bc-rosen-private-student-loan-shopping. © Transversospinales | bc-rosen-private-student-loan-shopping.

Smart shoppers can sniff out good deals during the summer — even if looking for private student loans made by banks, credit unions and other lenders.

Student housing deposits come due during the summer and other college bills come due at the end of the summer, so private loans are an option if you still need the money and have exhausted federal student loan limits and scholarship opportunities.

Those are important caveats because generally speaking, private student loans from banks, credit unions and online lenders such as Sallie Mae, SoFi, and EdvestinU should be an option of last resort.

One of the biggest problems with private student loans is that many families don’t do their research and comparison shop, even though there are so many websites that make this easier.

Keep in mind that many websites do not list all lenders, just those that pay them for placement, said Mark Kantrowitz, a financial-aid expert and author of “How to Appeal for More College Financial Aid.” As a result, the best rate advertised might not be the best rate. Finding a better rate may require a deeper dive.

a man wearing a suit and tie smiling and looking at the camera: Steve Rosen. © Provided by Tribune Content Agency Steve Rosen.

Kantrowitz said few smaller hometown banks offer their own private student loans. “They might offer personal loans and home equity loans or lines of credit,” he said. But repayment begins immediately on those loans as opposed to them being deferred until graduation.

Here are some other details to consider:

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*A majority of private student loans to undergraduate students require a creditworthy co-signer, such as a parent or grandparent. Remember, a co-signer is a co-borrower, equally obligated to repay the debt over 10, 20 or even 25 years, said Kevin Walker, publisher of

*Compare both the monthly loan payment and the total payments over the life of the loan. A longer repayment term may generate a lower monthly payment upfront, but you may lose your savings to a higher amount of total interest.

*Ask lenders about loan origination and other fees. Most private lenders do not charge upfront fees.

*Consider variable versus fixed rates. For example, Sallie Mae offers fixed rate loans from 4.25% to 12.59%; its variable rate loans start as low as 1.13% and run as high as 11.23%. However, variable rates carry more risk. If interest rates in general increase during the life of the loan, your student loan rate will also go up.

*Look for lenders that offer “borrower benefits,” said Walker. For example, many lenders allow borrowers to sign up for automatic payments, which comes with the added benefit of lower interest rates. Some lenders also offer cash back for graduation or a high grade-point average, he said.

Also important, does the lender offer evening and weekend call center options?

*You can put some private student loans into deferment or forbearance, but the terms are usually less flexible and the time period may not be as long. Interest will also accrue on private loans regardless of whether you defer or enter forbearance. In addition, loan forgiveness and debt cancellation programs aren’t available with private loans.

*Finally, if you have tapped out all other borrowing opportunities, it might be a sign that you are borrowing too much money. “Borrow only what you need, not as much as you can,” said Kantrowitz.

“Live like a student while in school, so you don’t have to live like a student after you graduate,” he said.

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