Private student loans tend to offer variable interest rate options, but federal student loans don’t come with variable rates. Consider the main benefits of variable rates before applying: Rates are typically lower. Variable interest rates often start off much lower than fixed interest rates.

What are three reasons to be careful about private student loans?

There’s a reason college students are racking up so much debt….Here are a few reasons to steer clear of private loans.

• No borrower protections. When you take out federal loans, you’re obviously required to pay that money back.
• Variable interest rates.
• No borrowing limits.
• Your lack of credit might cost you.

What are the advantages of taking out student loans through a private lender?

Take advantage of more flexible borrowing options. For one, there’s no need to fill out a FAFSA; private student loans aren’t based on need. Anyone who meets credit, income and any other qualifications can borrow private loans. Most private lenders also offer variable interest rates in addition to fixed rates.

Why are government student loans preferred over private loans?

The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student loans. The interest rate is fixed and may be lower than private loans—and much lower than some credit card interest rates.

What is a con of a variable student loan rate?

Cons. The recent trend has been toward rate increases for variable loans. Unpredictable monthly payments; the amount due could change. Your total number of monthly payments could change as the rate changes.

Is it better to get a fixed rate student loan?

It could change overnight if the market conditions fluctuate. Also, there is a possibility that the rate could jump sharply, increasing the overall cost of your loan. As a general rule, it is always better to first exhaust all your federal student loan options. These are always fixed-rate loans and have lower rates of interest.

How to find the best rate for a private student loan?

Having a cosigner with great credit will help you get the best rate on your private student loan. The best way to find out what kind of rate you will get and see your future monthly payments is to use Purefy’s rate comparison tool.

Can a variable rate student loan go up?

Your interest rate can increase. While variable-rate loans typically start with low rates, there is no guarantee that rates will stay low. If the market changes, you could see your rate increase up to the lender’s cap. Your monthly payment can go up.

When to apply for a private student loan?

If you are a graduate student or parent with excellent credit who already has good job security and just wants the best rate possible, private student loans may be the best option. All of Purefy’s lenders have no origination fees or prepayment penalties.