How to Apply for a Private Student Loan: An Overview
Specific steps and requirements vary by lender, but the overall application process is similar. Below is a simple breakdown of how to apply for a private student loan.
Determine How Much You Need to Borrow
Add up any federal student loans, scholarships, grants, savings, and work-study funds you expect to receive, then subtract that total from your school’s cost of attendance. Make sure when you calculate the total cost of attendance, you take into account things like tuition, room & board, meal plans, books, lab fees, and any other fees the school charges. The difference is the amount a private student loan would need to cover.
Compare Your Options
When comparing private student loans, evaluate these key factors:
Interest Rate Type
Fixed rates stay the same for the life of the loan and generally range from about 3% to more than 17%. Variable rates can change over time based on market conditions and typically start between 4% and 18%.
Repayment Terms
Consider the length of the repayment period and what your estimated monthly payment would be. Common repayment terms range from 5 to 20 years. A shorter term usually means a higher monthly payment with less interest paid over the life of the loan, while a longer term lowers the monthly payment and increases the total cost of borrowing.
Fees
Check for application, origination, or late payment fees. Many lenders don’t charge application or origination fees, while others may charge them as a flat amount or as a percentage of the loan that’s added to your balance. Late payment fees are typically a small percentage of the past-due amount or a flat dollar charge.
Borrower Benefits
Look at features like rate discounts, graduation rewards, payment relief options, and flexibility during repayment. Rate discounts, such as those for auto pay or consistent on-time payments, can reduce the interest you pay over the life of the loan. Payment relief and flexibility features, like forbearance, deferment, and grace period extensions, can help if your situation changes after you start repayment.
Choosing the right lender and rate type can lead to substantial savings, so make sure to research your options thoroughly. Abe offers a choice of five payment terms, six different payment relief options, a 2% graduation reward, and doesn’t charge application, origination, or other fees.
Gather All Your Documents
Once you know how much you need to borrow and you’ve picked your lender, gather the information you’ll need for the application. Always check the lender’s requirements, but many applications ask for:
- Your birth date and Social Security number (and your cosigner’s, if applicable)
- Your mailing address
- Your email and phone number
- Your school’s name
- Your grade level, and expected graduation date
- Your income (and your cosigner’s, if applicable)
- Your requested loan amount
Submit Your Application
When you’re ready, complete the application on the lender’s website. One key difference between private student loans and federal loans is that private lenders use credit to evaluate the application. Submitting a full application usually triggers a hard credit inquiry. To help you compare options before that step, many loans, like Abe, offer a prequalification tool that uses a soft credit check and shows estimated rates without affecting your credit score.2
After you submit your application, keep an eye out for important communications from your lender. Some applicants may need to provide additional documentation. If you’re approved, you will have a limited time (often 30 calendar days) to accept the loan terms and provide any supporting documentation, so it helps to apply early enough to meet your school’s billing deadline.
Tip: If you want to review your credit information ahead of time, you can access your credit reports for free at AnnualCreditReport.com. Seeing what’s on your report can help you understand how credit may impact your eligibility and terms when applying for a private student loan.
How Long Does It Take To Get A Student Loan?
The private student loan process can span several weeks from application to disbursement, so starting early helps you avoid delays and gives your school enough time to certify the loan.
When Should You Apply For Private Student Loans?
Unlike federal aid, private student loans typically don’t have a universal application deadline. Plan to apply at least 6 to 8 weeks before your next term’s bill is due to allow time for review, school certification, and disbursement.
How Long Do Private Student Loans Take to Process?
Private student loans typically take between one and eight weeks from application to school disbursement. In some cases, it may be faster.
Timing depends on the credit review, how much documentation is required, and how quickly your school responds to the certification request from the lender. You can help keep things moving by submitting complete information and responding immediately to any requests from the lender.
Tips for Applying for Private Student Loans
A few best practices can help simplify the private student loan application process and potentially save you money over the life of your loan.
Start Early
As soon as you know when you will enroll and which school you’re going to, begin estimating costs and reviewing your funding options. Before applying for a private student loan, it is usually best to exhaust grants, scholarships, and federal student loans.
Even if your payment due date is still months away, giving yourself more time can help you avoid feeling rushed while you gather information and make decisions.
Only Borrow What You Need
When a lender approves your application, the approved amount is typically a maximum based on the amount you request and the amount certified by your school. You don’t need to borrow the full amount you’re approved for. Borrowing less can reduce your total cost over time and may make repayment more manageable.
Do Your Research Ahead of Time
Review the lender’s eligibility requirements and understand how the loan works before you apply. When comparing options, consider:
- Interest rate type (fixed or variable)
- Repayment options while in school
- Repayment term length and estimated monthly payment after school
- Grace periods and deferment options
- Total cost of borrowing over time
- Any fees, if applicable
- Whether you have access to a creditworthy cosigner
An Abe student loan includes a prequalification tool2 that can help you see potential options and rates to simplify comparison without impacting your credit score.
Explore Options to Save
As you compare options, look for ways to reduce the cost of borrowing. For example, Abe student loans offer rate discounts such as an auto-pay discount of 0.25%18 and a good payment behavior benefit that can reduce your rate by 0.05% for each 6-month period of consecutive, on-time principal and interest payments, up to an additional 0.25% rate reduction.9 Abe also offers a graduation reward to borrowers—reducing their principal balance by 2% of their net disbursed loan amount upon request after graduation.8
Boost Your Credit Score
Because private student loans involve a credit review, stronger credit can improve approval chances and may help you qualify for a lower rate.
If you already have a credit history, focus on paying bills on time and keeping credit card balances low. If you have limited or no credit history, maintaining one or two accounts in good standing over time can help establish a record of on-time payments.
Be mindful of timing. Opening new credit accounts or applying for other loans shortly before applying for a student loan can affect your credit score.
Consider a Cosigner
If you have a limited credit history or a lower credit score, applying with a creditworthy cosigner can improve approval chances and may help you qualify for a lower rate.
Most cosigners are parents or grandparents, but a guardian or another trusted adult may also be able to cosign if they meet the lender’s requirements.
If you are not a U.S. citizen, many lenders require a U.S. citizen cosigner, even if you have a credit history in another country.
Start Your Private Student Loan Journey with Abe
Once you know what to expect, applying for private student loans can be quick and easy. With a plan, the right documents, and enough time before your school’s bill is due, you can move through the process with fewer surprises.
When you’re ready, explore Abe’s private student loan options for undergraduate or graduate school, and find your rate in minutes with no impact on your credit score.2