Private student loans are available with varying options and interest rates. There are rules that govern these student loans, and your credit and cosigner’s credit will impact the type of loan you get and the interest rate you will get it at.

Things to know
Lenders offer various types of loans depending on the degree or course you are pursuing. The type of loan is affected by the loan amount, repayment terms, and the interest rate.

• Many lenders check the course the student is pursuing, with regard to whether it is a career training program, nontraditional school, or a two-year degree.
• One can take undergraduate school loans for expenses to pursue a bachelor’s degree. These loans come at lower rates and higher loan limits than community college.
• Loans for graduate schools have maximum amounts and reflect a higher cost of attending the master’s degree or doctorate. Some lenders also give special loans for medical school, law, or business programs.
• Parent loans are offered to the parents of the students, and the repayment of these also falls on the parents.

Loan terms
Loan terms or the loan repayment term ranges from 5 to more than 20 years. Shorter student loans loans need higher payments per month, lower total costs, and lower interest rates. Longer loans have lower payments per month but have higher total costs and higher interest rates.

• There is a fixed minimum amount most lenders have. It could be as low as $1,000, but this option is not good if you only need a few hundred. The minimum amount may depend on where you live.
• Lenders also have a maximum limit that a student can borrow. The maximum loan can go higher if you are going to medical school, professional school, or graduate.

Interest rates
Student loans are offered on a fixed or variable rate. The interest rate type cannot be changed after taking a loan, and you need to decide at the time of taking the loan. You need to look at the Annual Percentage Rate – APR rather than just the interest rate, fees, discounts, and how many times the rate compounds in a year.

Loans on the basis of interest rates

• Fixed-rate student loans are loans that do not change the interest rates in their entire term. The rate depends on the loan term, your credit, the lender, and the market rate. You can easily plan the payments without worrying about the rate changing.
• Variable-rate student loans depend on the rise and fall of the interest rate, which is tied to an index like the prime rate. The lender adds the margin to the index to determine the total interest, and there may be a limit as to how low or high you can go.
  The variable interest rate initially has a lower interest rate and could remain so. If you are taking this loan, it means you are taking the risk of the interest rising, increasing the monthly payment and cost of borrowing.

Variable-rate student loans are best for those who can repay quickly. They will limit the risk and are for those who can afford higher monthly payments.