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When outlining your plans for how to pay for college, student loans may be part of the financial picture. According to information published by the Pew Research Center, roughly one-third of adults under age 30 have some student loan debt as higher education costs continue to climb.

If you’ve already qualified for federal student loans and have sourced other forms of financial aid but still need more funding for school, private student loans can help close the gap. When applying for private student loans, your current bank might be the first place you look. But there are some reasons to cast the net wider and compare other borrowing options.

Here’s some helpful information worth knowing about how to choose a student loan lender other than your current bank and why it might make sense to do so.

Pros and Cons of Getting Private Student Loans With Your Current Bank

Applying for private student loans with your current bank may seem like a natural choice. If you already have checking and savings accounts at the bank or other loans, then it is possible you may feel more comfortable borrowing from a financial institution you’re familiar with.

And that can have certain advantages. For example, some banks might offer an interest rate discount or reduction for private student loans if you have another account with the bank that is in good standing. Scheduling your student loan payments may also be easier if you can link your checking account to your loan account and see balances and payments in one place.

On the other hand, there are some benefits to getting private student loans with another bank or private lender. Banks and other lenders that offer private student loans can vary greatly when it comes to things like:

•   Minimum and maximum loan amounts
•   Interest rates
•   Loan fees
•   Repayment options

Looking for a private student loan with a different bank or lender could give you more options for a better interest rate, fewer fees, being able to borrow more money, or qualifying for more flexible repayment terms. These are important considerations which can impact student loan repayment.

Choosing a Lender for a Student Loan

Whether you’re borrowing a little or a lot, it’s important to find a bank or lender that matches up with what you need for private student loans. If you’re starting from square one with how to choose a lender for a student loan, these tips could help.

1. Considering Loan Limits

When comparing banks, credit unions, or other private student loan lenders one of the first things to look at is the lending limits at each institution.

Some private student loan lenders impose a minimum loan amount and cap on the total lifetime amount you can borrow to finance your education. Being aware of those thresholds matters for making sure that you can borrow what you need.

Keep in mind, however, that the actual amount you’re able to borrow may be lower than the total loan maximum advertised by the financial institution. The amount you ultimately qualify for (or don’t) can depend on many factors including state laws and your credit history. (More on that and other factors below.)

2. Looking at What’s Needed to Qualify

Every private student loan lender is different when it comes to their minimum qualifications to borrow. While thresholds vary from lender to lender, common criteria reviewed to make lending decisions might include:

•   Credit scores and credit history
•   Income
•   Enrollment status
•   Citizenship or permanent residency status

Also, be aware that you may not be able to qualify for a new private student loan if you have any existing loans that are in default. In that case, you’d need to bring your old loans current first before you could be approved for a new loan by most lenders.

3. Checking Co-Signer Requirements

Credit scores and credit history can play a big part in private student loan approval decisions. Borrowers with little or no credit history may need a qualifying co-signer to get approved for private student loans. Depending on the bank or lender, a qualifying co-signer could be a:

•   Parent
•   Grandparent
•   Sibling
•   Spouse
•   Other relative
•   Friend

For those who think they’ll need a co-signer to qualify for private student loans, there are a couple of things to remember.

First, it’s a solid idea to be upfront with the prospective student loan co-signer about the implications of signing off on the loans. As a co-signer, they’re equally responsible for the debt and all loan activity will show up on their credit report the same as it will on a primary borrower’s credit report. So if the borrower pays late or defaults, it could adversely affect both the co-signer and the primary borrower.

Second, you can check to see if the banks, credit unions, or private lenders you’re looking into offer a co-signer release. This allows the co-signer to be removed from the loans once certain conditions have been met. For example, you may be able to get a co-signer release after making a certain number of consecutive on-time monthly payments.

Going forward, then, only the primary borrower’s name would be listed on the loans. Each lender will have different requirements for co-signer release, and some lenders will not offer that option, so understand the policies at each institution before borrowing the loan.

4. Reviewing Repayment Options

Next, look at the different options a bank or lender offers for repaying private student loans. For example, do the loans come with five-year terms? 10 years? 15? Also, consider whether there is an option to make full payments or interest-only payments while in school or whether the lender offers a repayment deferment while enrolled.

Consider whether the lender offers any type of student loan grace period immediately after graduation in which no payments need to be made. And if a deferment or grace period is available, take note of what interest and/or fees accrue on your loan balances during that time.

5. Comparing Interest Rates and Fees

Cost is often one of the most important considerations for how to choose a student loan lender. After reviewing the other details of borrowing narrow the focus down to the interest rates and fees a private student loan lender charges.

Consider whether a bank offers variable rate loans, fixed rate loans, or both. On a variable rate loan, the interest rate is just that—variable. This means it can fluctuate over time, increasing or decreasing, depending on how the underlying benchmark rate moves. With fixed rate loans, the interest rate stays the same for the life of the loan.

Deciding which one to choose may depend on what’s happening with interest rates in general. With interest rates already low, a fixed rate loan option could make sense if you want reassurance that your rates won’t go up over time.

But if rates drop even further, a variable rate loan could allow you to capitalize on that and potentially save money on interest—provided rates don’t go back up again over time!

Other factors to consider when deciding between a fixed and variable rate loan include the length of the repayment term, and whether or not the borrower would be able to cover a higher monthly payment should the variable interest rate increase.

Aside from whether private student loan rates are fixed or variable, take time to compare the rates themselves across different lenders. If a lender offers a range of interest rates, look at how the high end and low end of that range lines up with what other banks or lenders are offering.

Remember, your credit score and history (or the credit score and history of your co-signer, if you need one) can play a big part in determining the rates you qualify for. But looking at how rates stack up overall can help with how to choose a lender for a student loan.

Banks and other lenders typically allow potential borrowers to see what rates they may qualify for. When getting rate quotes, double check that the lender is doing an initial “soft” credit pull. This won’t impact an individual’s credit score¹, unlike a “hard” credit inquiry.

After you’ve compared rates, check out the fees a bank or lender charges as well. Some fees to consider include:

•   Loan origination fees
•   Late payment penalties
•   Returned payment fees

The good news is, there are plenty of lenders that don’t charge fees like origination fees for private student loans. These fees could add up, and if there is a fee for paying late or for unforeseen insufficient funds, it can be important to factor those costs in.

6. Asking About Loan Discounts or Other Benefits

Another item on the list of things to consider for how to choose a student loan lender are the “extras” a bank might offer. For instance, it’s not uncommon for lenders to cut you a break on interest when you enroll in automatic payments for your loans.

While the specifics vary by lender, some may offer a reduction of the interest rate when the loan is enrolled in autopay, which can help reduce the cost of interest over the life of the loan. Another consideration may be whether a bank offers things like hardship programs or forbearance options in case there are issues repaying the loan at some point.

Unlike federal student loans, private student loan lenders aren’t required to offer hardship deferment or forbearance programs, but some do. SoFi members, for example, may qualify to pause their payments temporarily through the Unemployment Protection Program.

And finally, look at whether a lender offers anything else that could make help make your life as a student loan borrower easier. That could include an easy-to-use mobile app for managing loans, free online educational resources to help you better understand student loans, or career counseling.

All of those features can add value when choosing a student loan lender that isn’t your primary bank or another lender.

Doing Your Homework Can Pay Off When Choosing a Student Loan Lender

When considering private student loans, it’s important to remember that all banks and lenders aren’t created equally. If you’re willing to spend some time researching loan options, it might become easier to find a lender that’s the best fit for your personal needs and budget.

While we believe exhausting your federal aid options first before taking on private student loans is wise, when looking for private student loans beyond your bank, consider adding SoFi to your list of potential lenders.

SoFi offers no-fee private student loans for undergraduate and graduate school and for parents, too, all with flexible repayment options and competitive interest rates.

Looking into borrowing a private student loan to pay for school? Learn more about how SoFi can help.

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¹Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Public service loan forgiveness has been in the news a lot over the last year—and not for good reasons. There was the news that very few people have actually had their federal student loans forgiven.

Then there was the Public Service Loan Forgiveness (PSLF) news that the whole program might be cut . And now a lawsuit has been filed on behalf of a number of teachers who had their PSLF forgiveness denied, alleging mismanagement of the program.

What does this news mean for you? Should you still try to get your federal student loans forgiven, and how can you plan ahead for any more public service loan forgiveness updates?

What is Public Service Loan Forgiveness?

The public service loan forgiveness program is supposed to work in a fairly straight-forward way: After ten years of public service (and making payments on your loans), you can have the remainder of your student loans forgiven.

There are, of course, some requirements—and this is where it gets more complicated. To qualify for public service loan forgiveness you have to:

•   Work full-time in a qualifying public service job.
•   Make 120 monthly loan payments on a qualifying repayment plan, which is typically an income-driven repayment plan.
•   Have a federal Direct Student Loan.

For the majority of people who have their PSLF applications denied, it’s because they allegedly didn’t meet these requirements.

Most importantly, only federal Direct Student Loans qualify. Federal Family Education Loans (FFEL) or Perkins loans do not qualify—even though many of the federal loans when the loan forgiveness program was created in 2007 were FFEL loans.

You may still be able to qualify if you have one of those loans, but you would need to consolidate your federal loans into a Direct Consolidation Loan and none of the payments made before the consolidation would count.

You also need to be on a qualifying payment plan, which is either the standard ten-year repayment plan or an income-driven repayment plan. These determine how much you’re required to pay each month as a percentage of your income.

And you need to work for a qualifying employer. To verify that your public service job qualifies, fill out the public service loan forgiveness employer certification form .

Once you meet all these requirements, you still have to apply for loan forgiveness after your ten years of qualifying payments. It doesn’t happen automatically. This is where much of the public service loan forgiveness news comes in.

What Is the Latest Public Service Loan Forgiveness News?

Since the Public Service Loan Forgiveness program was launched in 2007, the first federal student loans became eligible for forgiveness in late 2017.

However, instead of a rash of loans being wiped clean, more and more news has come out about the number of applications being denied.

The latest data from the U.S. Department of Education found 73,554 borrowers have submitted applications for loan forgiveness, but only 864 have been approved. That’s not very many.

Over 2 million people also took the first step of having their employer certification approved. Since not all of those people followed through the rest of the process, critics argue it suggests there continues to be confusion around the requirements.

In fact, this was exactly why Congress approved the the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) opportunity in 2018—which allows people who had their loan forgiveness applications initially denied because they were on the wrong repayment plan to get re-approved under the new requirements.

But the most recent numbers found only 442 of those TEPSLF applications had gotten their loans forgiven. That’s been frustrating for a lot of applicants and lawmakers. It’s even prompted a lawsuit from a number of teachers who’ve had their applications denied.

Even with all the distressing public service loan forgiveness news, many were still frustrated to hear the program was at risk of being eliminated in the most recent budget proposal .

What does all this mean for you?

Should You Still Try for PSLF Forgiveness?

Just because there’s been a lot of bad news for PSLF lately doesn’t mean you should necessarily give up on loan forgiveness.

Some of those applicants have been successful and, according to the data, the average amount of loan forgiven was $59,224. That’s worth following up on—even if it takes a lot of attention to detail.

The number-one reason applications were denied was because of qualifying payments—either not enough payments had been made yet or they weren’t made under a qualifying income-driven repayment plan.

That doesn’t mean those applications won’t eventually be approved, either after making additional payments or through the new temporary expanded program. (The average loan amount forgiven under the TEPSLF program was $39,723.) But it does mean you want to double-check all the requirements.

To do this, you may want to use the Department of Education’s PSLF Help Tool. Many who applied for loan forgiveness simply didn’t actually qualify for it in the first place.

It also means you should have a back-up plan and shouldn’t assume you’ll get your loans forgiven. Because employment gaps or payment forbearance periods (for instance, if you went to graduate school) can lead to delays in meeting the 120-month time requirement, you may want to plan ahead.

In this case, it may take an extra year or two to qualify for loan forgiveness. It also may take extra work on the application.

And if you’re working in a qualifying public service job just to get loan forgiveness, then you may want to consider your options if there are other jobs you’d want instead that might have a higher salary.

Regardless of the latest public service loan forgiveness news, you can always ask yourself: Is PSLF right for you?

How Can You Plan Ahead for Any Changes to Public Service Loan Forgiveness?

The good news is if you’re currently working towards Public Service Loan Forgiveness, then you could still qualify even if the program is cut. The proposal is only to eliminate loan forgiveness for students taking out new loans starting July 1, 2020, so it hopefully wouldn’t negate those already making qualifying payments.

It also may be true that federal loan forgiveness programs may yet get revised or amended to address the many rejections. But because these things can be uncertain, it may be a good idea to budget with the plan of paying your full student loans.

Ultimately, your goal is probably to save money and do good in the world. Public Service Loan Forgiveness is a great way to have any remaining loan balance after 10 years of payments wiped clean if you work in public service, and if you qualify, but it also has some drawbacks.

It means you have to stick to an income-driven repayment plan, which means your monthly payment amount will increase as your income increases. In that case, the loan could potentially be repaid in full before the standard 10-year repayment period ends, leaving no balance to be forgiven.

If you choose to consolidate federal loans that don’t qualify for PSLF without consolidating them, such as the Federal Perkins Loan and the Federal Family Education Loan (FFEL), keep in mind that the interest rate for the consolidation loan could be higher due to how the rate is calculated (and the interest rate of a Direct Consolidation Loan has no cap).

So, might you save money with the PSLF Program? The answer is a firm maybe. Another option, which would make you ineligible for loan forgiveness and other federal repayment benefits and protections, is to refinance your student loans at a lower interest rate or more ideal terms for your situation.

Refinancing is typically a better option for those who are in a stronger financial situation than when they graduated.

Through refinancing, borrowers consolidate their student loans into one new loan, ideally with rates and terms that work better for them.

For example, if you qualify for a lower interest rate that could help save money over the life of the loan and could allow you to pay off your student loans quicker— depending on the loan term you choose. You may want to weigh the pros and cons to consider what makes the most sense for you.

Find out what interest rate and terms you qualify for in just two minutes. Check out SoFi student loan refinancing today.

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External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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