MarketWatch Picks has highlighted these products and services because we think readers will find them useful; the MarketWatch News staff is not involved in creating this content. Links in this content may result in us earning a commission, but our recommendations are independent of any compensation that we may receive. Learn more
For 10-year fixed-rate private student loans, average rates hit 6.87% for the week ending July 25, while 5-year variable-rate loans saw rates hit 3.93%, according to data from personal finance company Credible of those who prequalified on their student loan marketplace with credit scores of 720 and above. Of course, the exact rates you’ll pay depend on factors like what lender you choose, the type of loan (fixed-rate or variable-rate) and your credit score. See the lowest private student loan rates you may qualify for here.
There are two main types of student loans: federal, which are made and funded by the federal government, and private, which are issued by private financial institutions like banks and credit unions. While federal student loans have a fixed interest rate, private student loans can have either a variable or fixed rate.
“I always recommend that students borrow federal first before turning to private student loans,” Mark Kantrowitz, a student loan expert and founder of PrivateStudentsLoans.guru, recently told MarketWatch Picks. Indeed, federal loans usually have more favorable repayment terms (like income-driven repayment plans), loan forgiveness and other perks than do private student loans.
That said, if you’ve maxed out your federal student loans and you’ve still got debt, private student loans can help bridge gaps in your funding. Additionally, if you have excellent credit or you have a cosigner with excellent credit, you’ll likely be able to take advantage of competitive interest rates, which can sometimes make private student loans more affordable than public loans. Here are four things to know before you take out a private student loan.
Rates accurate at the time of publication.
The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.
Have an issue with your financial adviser or looking for a new one? Email questions and concerns to picks@marketwatch.com.
Alisa Wolfson is a reporter for MarketWatch Picks.
Visit a quote page and your recently viewed tickers will be displayed here.