Private student loans are provided by private lenders — banks, credit unions, and online lenders. You can use private loans to pay for educational costs and living expenses, which your federal education loans might not cover. Interest rates and terms on private student loans can vary, depending on your financial situation, credit history, and the lender you choose.

You can use private student loans to pay for education-related costs and living expenses, which your federal school loans might not cover. Some uses include:

• Tuition and fees
• Room and board
• Housing utilities
• Meals and groceries
• Books
• Supplies
• A personal computer you’ll use for school
• Dependant childcare expenses

There are several types of student loans:

• Federal student loans are offered by the U.S. Department of Education and have interest rates set by Congress. These loans also provide benefits and protections that private student loans don’t offer, such as access to federal deferment and forbearance options, income-driven repayment programs, and student loan forgiveness programs.
• Undergraduate student loans include both federal and private student loans that are used to pay for your undergraduate studies.
• Parent PLUS loans are available to parents who want to help their child pay for school. Unlike other federal student loans, PLUS loans require a credit check, and you might not qualify if you have an adverse credit history, such as a default, delinquent account, or repossession. Keep in mind that some private lenders also offer parent student loans  — though these don’t come with the federal protections that PLUS Loans offer.
• Graduate student loans can be used to help you pay for grad school. Direct Unsubsidized Loans and Grad PLUS Loans are two types of federal student loans that can be used for graduate programs. There are also several private lenders that offer graduate student loans.
• MBA student loans can help you finance a business degree. While you might be able to use a general graduate student loan to pay for these costs, there are also private lenders that offer specialized MBA loans.
• Law school student loans can be used to pay for a law degree. You can take out general graduate student loans for this, or borrow specialized law school loans from certain private lenders.
• Medical school student loans can help you cover expenses while attending med school. Some medical school loans also sometimes let you defer payments until after residency.

The Valley Credit Union marketplace allows you to compare real, pre-qualified student loan rates through a single platform. Think of it like Expedia or Google Flights for student loans.

With our marketplace, you can compare real repayment plans from multiple lenders side-by-side so you know precisely how each loan stacks up when it comes to APR, monthly repayment, total repayment amount, and repayment options.

Student loan interest works by adding a percentage of the loan amount to your outstanding balance over time. This interest rate represents the cost of borrowing money. When you make monthly payments, a portion of the payment is allocated towards covering the accrued interest, while the remaining amount goes towards reducing the principal balance (the original loan amount). Choosing a lower interest rate can help you save money over the life of the loan and accelerate the process of paying off your debt.

• Fixed-rate loans: Your interest will stay the same throughout your loan term, in other words, your payments won’t change.
• Variable-rate loans: Interest rates fluctuate based on market conditions, which may affect your monthly payments.

While private student loans can be a helpful option in some cases, they also come with drawbacks to keep in mind, including:

• No federal benefits: Private student loans don’t come with federal benefits and protections. For example, you won’t be eligible for student loan forgiveness programs or federal deferment and forbearance options.
• Lack of repayment options: Unlike federal student loans, private student loans don’t provide a variety of repayment options. For example, private student loans typically don’t offer income-driven repayment or graduated repayment plans.
• Potentially higher interest rates: If you have excellent credit, you might get approved for a lower interest rate on a private student loan compared to a federal loan. However, many college students haven’t yet established enough of a credit history to qualify for these rates — so unless you have a cosigner, you’ll likely get a higher rate on a private student loan.

With a private student loan, you may be eligible to borrow up to 100% of your school’s cost of attendance, i.e., the total amount needed for tuition, fees, and other expenses. However, your final loan amount will depend on any other financial aid or loans you’ve already received.

How much you can actually borrow will vary by lender and can include annual or cumulative borrowing limits. Other private lender criteria that can affect how much you can borrow might include your credit history, the credit quality of your cosigner, your school’s certified cost of attendance, the degree you’re pursuing, and more.

Receiving the funds for your private student loan depends on whether you’re borrowing an in-school loan or refinancing an existing loan.

For in-school private student loans, the funds are typically sent straight to your school to cover tuition. The school then gives the rest of your loan money directly to you, the student, for other expenses related to getting your degree, such as housing.

Your school sets the disbursement date (when you actually receive the money), which is usually around the beginning of the semester. Regardless of when you applied for the loan, your school’s disbursement date will be the same. However, it’s best to apply early so that you can avoid any unexpected confusion or delays.

We suggest giving yourself at least 30 days to be safe, but be sure to contact your financial aid office to learn more about accessing your funds.

For student loan refinancing, no new funds are disbursed. Instead, your new private lender pays off your existing loan(s) and gives you a new loan with new terms. This generally happens within a few days, but always check with your lender(s).

You can apply for private student loans at any time since there’s no deadline tied to them (like filling out the FAFSA for federal loans). But it’s still a good idea to apply for private loans as soon as you know you’ll need them to cover education costs.

Although it varies depending on the lender and your school, it can sometimes take 3 to 5 weeks for you to receive the funds. So, if you’re trying to decide when to apply for a private student loan, be sure to give yourself some time and apply sooner rather than later.

Each lender has different requirements when it comes to qualifying for a private student loan. But typically you must:

• Have a qualifying credit score (or a cosigner with one)
• Have a qualifying income and debt-to-income ratio (DTI) (or a cosigner with one)
• Be enrolled in an eligible education program
• Be a U.S. citizen or legal resident with a Social Security number
• Be at least 18 years old and hold a high school diploma or equivalent (or have a cosigner)
• Use the loan for education purposes only

Yes, you can get financial aid with bad credit. Bad and low credit student loans are available but you may need a cosigner. 

While federal loans don’t require a credit check, private student loans do. Many students don’t qualify for private loans on their own because they don’t have a credit history or they have bad credit. If that’s your situation, you may need to add a cosigner to qualify for a private loan.

Private student loans require a credit application that examines income, employment, and a credit report. The lower your credit score, the higher the risk for the lender, which translates into higher interest rates. One way to get approved for a loan with a lower rate can be to add a creditworthy cosigner to your loan application.

In most cases, yes. While you typically don’t need a cosigner unless you’re under the age of majority in your state (usually 18 to 21), having one can improve your chances of approval – especially if you have limited or poor credit history. Lenders often require a creditworthy cosigner to reduce their risk and secure better terms.

In fact, over 90% of private student loans for undergraduate students have a cosigner. Even as a graduate student, adding a cosigner with strong credit can help you qualify for a lower interest rate.

Our marketplace makes it easy to compare cosigners and find the best possible rate for your loan.