Private Student Loan Rates Drop, Lending Terms Improve
BOSTON, Aug. 10 /PRNewswire/ -- After a few years of strict credit requirements and limited options, students this year have seen financial institutions once again offer private student loans. And with the financial markets rebounding, more lenders mean better loan terms for students and parents.
"As the banking industry begins to recover, student loan lenders are here to stay -- and they're eager to find borrowers," said Kevin Walker, Co-founder and CEO of SimpleTuition, Inc. "This is good news for borrowers, who are finding lower rates, fewer fees and expanded borrower benefits."
SimpleTuition compiled the latest data on national, regional, and local private student loans. Among 11 of the top private student loan lenders, SimpleTuition found:
- Lower rates among the top five lenders, including a drop of as much as two percentage points at one of the largest lenders.
- Seven lenders not charging origination fees.
- The return of -- and increases in -- borrower benefits, including discounts for automated payments.
- Shorter repayment term options, potentially saving many thousands of dollars.
"In addition to faster repayment terms, Sallie Mae's private education loans can help students save hundreds or even thousands of dollars by making interest payments while in school," said Charlie Rocha, senior vice president, Sallie Mae, the nation's leading saving, planning and paying for education company. "This new model of private education loans encourages responsible borrowing and empowers families to pay a little now and save a lot later."
Private student loans peaked at about 25 percent of total education borrowing during the 2007-2008 school year. Due to the recent credit crisis, private student loans dropped to 13 percent during the 2008-2009(1) school year. However, these loans have increased in popularity this year as tuitions increase while financial aid from schools continues to be tight and federal loan limits remain unchanged.
"At Discover, we support responsible borrowing and encourage students to maximize scholarships, grants and other free financial aid before taking loans," said P.K. Parekh, director and general manager of Discover Student Loans. "We recently reduced the lowest eligible interest rate on our Certified Private Loans to help families cope with the rising costs of higher education, and as an extra benefit, we give students a 2% Graduation Reward."
(1) College Board, Trends in Student Aid, 2009 http://www.trends-collegeboard.com/student_aid/4_1_loans.html?expandable=0
SOURCE SimpleTuition, Inc.