Rates on 10-year, fixed-rate private student loans are down for the third straight week

Thinking of taking out private student loans? Here’s what to consider.

Getty Images/iStockphoto

Private student loan rates for 10-year fixed rate loans are down for the third straight week at 5.61% for the week ending June 6, down from 5.78% the week prior, according to the latest data from personal finance marketplace Credible. Meanwhile, 5-year variable rate loans are up just slightly to 3.67% from 3.45% the week before. You can see the lowest rates you may qualify for here.

Private student loans are issued by private financial institutions such as banks and credit unions, unlike federal student loans, which are issued by the government. “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, for their part, federal loans have more favorable repayment terms, options for loan forgiveness and other perks, compared to private loans.

That said, if you’ve maxed out your federal student loans and you’ve still got debt, private student loans can help bridge any 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 make them more affordable than public loans. So if you need a private loan, here are the key things to know. 

Rates vary on private student loans, and lenders take things like credit score and income into account when determining whether or not a borrower qualifies for a loan and at what rate. You can see the lowest rates you may qualify for here. Private student loans are generally more difficult to get than federal student loans. Here are four things to know before you take out a private student loan.

It’s not uncommon for private student loan lenders to require that payments be made while the borrower is still in school, whereas federal student loans generally aren’t due until after the borrower has graduated. What’s more, private student loans are sometimes subject to prepayment penalties, so check with your lender to make sure you know what to expect if you plan to make payments ahead of schedule.

Show some Love^^