The Ultimate Parent Student Loans Guide

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For parents who want to help their child pay for college, parent student loans can fill the gap between college savings and actual costs.

Of course, taking out parent student loans is a major decision that can affect your finances for the next decade or longer. That’s why it’s important to find the best option for you today — so you can keep this debt affordable and manageable for years to come.

Use this guide to parent student loans to discover the best way to fund your child’s education.

3 options for parent student loans

Parents looking to borrow for their child’s college costs have three main options:

  • Parent PLUS Loans: These federal student loans for parents are financed and disbursed by the U.S. Department of Education.
  • Cosigned private student loans: The college student is the primary borrower, and the parent is the cosigner.
  • Private parent student loans: These loans are offered by private lenders. The parent is the only borrower on these loans.

Read on to find out more about each one.

Type of Loan Requirements Pros Cons
Parent PLUS Loans The parent and student must submit a FAFSA to establish eligibility for PLUS Loans. These loans are held by the parent only. To get PLUS Loans, the parent must not have adverse credit, but it can be easier to qualify for PLUS Loans than private parent student loans. As federal student loans, they include some borrower protections, such as eligibility for income-driven repayment plans or deferment. Parent PLUS Loans carry some of the highest federal student loan rates and charge a high fee.
Cosigned Private Student Loans The parent and student apply for this loan together, with the parent as the cosigner of this debt. The loan is owned equally between the student and parent, and the parent has a responsibility to repay this debt if their child can’t. Interest rates can be competitive for well-qualified parents. Some lenders offer the option to release a cosigner from the loan. Parents are responsible for this debt, and any missed or late payments could damage their credit.
Private Student Loans The parent alone will apply for and own these student loans. Only creditworthy parents with a sufficient income and positive credit history will qualify. Interest rates can be competitive for well-qualified parents. Parents can get necessary financing without adding to their student’s debt. This product isn’t widely offered, so choice in lenders might be limited. Because of stricter lending criteria, not every parent will qualify for these student loans.

1. Taking out Parent PLUS Loans

To qualify for a Parent PLUS Loan, you’ll need to meet certain eligibility requirements:

  • Complete and file a Free Application for Federal Student Aid (FAFSA). Based on the information you provide on the FAFSA, your need for aid will be evaluated.
  • Not have an adverse credit history. Unlike federal student loans offered directly to students, Parent PLUS Loans take the borrower’s credit history and score into account. See a full explanation of what the Federal Student Aid Office views as adverse credit.
  • Be the parent or guardian of a dependent college student. This dependent can be a biological child, adoptive child, or possibly a stepchild under 24 who is currently enrolled in college at least half time.
  • Have a need for a Parent PLUS Loan. You can borrow Parent PLUS Loans only for college costs that aren’t covered after all other student aid is applied.

Your child’s financial aid award letter might list Parent PLUS Loans as part of the financial aid package along with instructions on how to apply for Parent PLUS Loans.

If not, you can contact their college’s financial aid office to find out how they handle Parent PLUS Loans, whether you’re eligible for Parent PLUS Loans, and how much you can borrow.

Pros and cons of Parent PLUS Loans

Parent PLUS Loans offer some federal student loan benefits private lenders don’t.

For example, Parent PLUS Loan repayment options include the following:

  • Deferment or forbearance because of unemployment or other financial hardship
  • Lower monthly payments through an Income-Contingent Repayment Plan, which includes forgiveness of any balance remaining after 25 years
  • Public Service Loan Forgiveness for any remaining balance after 10 years of on-time payments for borrowers who meet the requirements

Parent PLUS Loans likely will be the easiest type of parent student loan to qualify for and receive. Even though Parent PLUS Loans require that you don’t have adverse credit, the Department of Education has few other lending requirements.

Here are a couple of downsides to Parent PLUS Loans:

  • Parent PLUS Loans don’t automatically defer payment until six months after the student leaves school. Instead, repayment kicks in once the loan is disbursed. However, you can request to defer Parent PLUS Loans for as long as your child is in school and up to six months after their enrollment ends.
  • Parent PLUS Loans have high interest rates compared to other federal student loans and even cost more than some private student loans. For 2017-18, the interest rate is 7.00% — compared to 4.45% for Subsidized Direct Loans and Unsubsidized Direct Loans for undergraduates. An additional 4.276% loan fee is taken out of funds upon disbursement.

Parent PLUS vs. private student loan interest rates

Although Parent PLUS Loans carry the same interest rate for every borrower, private student loan lenders typically offer better rates for well-qualified individuals.

Private student loan rates start at around 3.00%, which means well-qualified parents might find a better deal with private student loans than the 7.00% interest rate and 4.276% loan fee offered by Parent PLUS Loans.

Below is a comparison of borrowing $10,000 through a Parent PLUS Loan versus a private student loan with a 5.00% interest rate and no origination fee:

Parent PLUS Loan Private Student Loan
Initial balance $10,500 (including loan fee) $10,000
Total cost of 10-year repayment $14,630 $12,728

Given the assumptions above, choosing a private parent student loan would save you $1,902.

2. Becoming a parent cosigner on student loans

Whatever amount you’re coming up short on, a private student loan likely will be able to cover it. You also won’t have to deal with the lending limits of federal student loans.

Cosigning private student loans is a common way to get college financing. With this option, the student is the main or primary borrower of the student loan and the parent is the cosigner. You’ll need a good credit score and a steady, decent income history to qualify as a cosigner for private student loans.

Here are some private lenders that offer cosigned student loans:

Pros and cons of cosigning private student loans

There are several benefits of choosing to cosign with your child:

  • Cosigning can be a way to help your child access private student loans and better rates they might not qualify for on their own.
  • Some private student loan rates beat federal student loan rates, which could save you money.
  • Usually, there is the understanding that your child will take primary responsibility for repaying the loan. For parents planning for their child to repay at least some of a parent student loan, cosigning can be a smart option.
  • Many lenders offer cosigner release after your child makes a certain number of on-time student loan payments. Check with lenders to see what their terms are for a cosigner release.

When you cosign a private student loan, you agree to equal liability and responsibility for repayment of this student debt. That fact leads to some of the biggest cons of cosigning:

  • If your child can’t make payments or defaults, the lender will come to you to settle the debt.
  • Your credit will be impacted by the payments you and your child make on the loan — for better or worse. If you’re not the one making payments, you might be unaware or unable to prevent missed payments, which can hurt your credit.
  • You’ll need good credit to get the best rates; otherwise, you and your child could end up paying more to borrow for college.

3. Taking out private parent student loans

Private student loans are another option for parents looking to finance their child’s education.

Parents can cosign private student loans with their child or take advantage of private parent student loans. The latter are student loans in the parent’s name only. They allow you to finance your child’s education without adding to their student loan burden.

Private parent student loans are offered by private lenders, including banks, credit unions, and financial tech companies. Here are some lenders that offer private parent student loans:

If you’re considering this option, watch out for these potential drawbacks:

  • If your credit score is less than stellar, you still might be able to qualify for a private student loan. But the worse it is, the higher your interest rate will be. You’re less likely to benefit from a private student loan over a Parent PLUS Loan.
  • You are solely responsible for this debt and have complete control over payment.
  • The terms and rates on parent student loans might differ from those on a traditional loan to a student. So you could end up with a higher interest rate on a private parent student loan than on a cosigned a loan, and you might face more limited options.
  • Your child has no responsibility to repay this loan, and there’s no way to legally transfer it to your child’s name. You’ll be repaying this debt, so avoid borrowing more than you can afford to repay.

Carefully choose your terms for parent student loans

While Parent PLUS Loans offer the same terms to all borrowers, private lenders provide a wider range of student loan terms from which to choose.

Pay attention to terms and pick those that will be most beneficial to you. Here are the private student loans terms to decide on before you apply.

Requirements for private parent student loans

Each private lender has its own set of eligibility requirements and loan options. So finding the right parent student loan often means choosing the right private student lender.

Here are some eligibility requirements to keep in mind as you search and apply for private student loans:

  • Credit score and history: Most lenders will require that parents taking out student loans have a good credit score and history. You’ll usually need a credit score of 650 to 680 or higher to qualify for private student loans. However, some lenders have more flexible standards.
  • Employment history and income: Private lenders will want to see that you have stable employment and a high enough income that you can afford to repay a private student loan.
  • Debt-to-income ratio: In addition to looking at your income, lenders also will compare it to other debts you have via your debt-to-income ratio. A low debt-to-income ratio (ideally around 35 percent or lower) is a sign that you’re responsibly managing your debts and can afford to borrow more.

If you can meet those requirements, you have a good chance of being approved for private parent student loans.

Variable or fixed student loan interest rates

Parent PLUS Loans have fixed interest rates, which don’t change over the life of the loan. But private parent student loans offer you the choice between variable rates and fixed rates.

Variable rates are usually lower than fixed rates, but they can rise over the life of the loan. With overall interest rates rising, borrowers can expect their variable-rate student loans to become more expensive.

Parents can decide for themselves if the lower variable rate now is worth the risk of paying more later.

Repayment length and options

The right student loan term is also crucial. A longer student loan term will mean paying more in interest over time and could come with a higher interest rate. But you also want to choose a loan term that will keep monthly payments affordable.

While federal student loans come with flexible payment options, that isn’t the case for private parent loans for college students. With no income-driven repayment plans or formal deferment or forbearance programs, choosing an affordable term is even more important.

Some private lenders offer different options to manage student loans. As part of your parent student loan research, check whether a lender offers deferment, forbearance, or repayment protection — and under what circumstances.

Shop around for the best parent student loans

Student loans for parents are nothing to be entered into lightly. But if you have a working knowledge of your options, then you’re on the right track.

Look at limits, interest rates, fees, and terms. There are parent student loans out there that can be custom-fitted to your needs and preferences; you just have to look for them.

At Student Loan Hero, we keep a running tab of the best student loans. Check out the table below for comparison.

Parents, here’s the bottom line: College can quickly become expensive — but borrowing doesn’t have to add much to the costs. Be sure to look at all your financing options before making a final decision on parent student loans.

Meredith Simonds contributed to this article.

Need a student loan?

Here are our top student loan lenders of 2018!
LenderVariable APREligibility 
1 Important Disclosures for CollegeAve.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  2. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
  3. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Information advertised as valid as of 07/1/2018. Variable interest rates may increase after consummation.

2 Important Disclosures for Discover.

Discover Disclosures

  1. At least a 3.0 GPA or equivalent qualifies for a one-time cash-reward of 1% of the loan amount of each new Discover student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.

3 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Competitive rates calculated monthly at the time of loan approval. (Rates are effective as of 8/01/2018 and include a 0.25% discount applied when a borrower in repayment elects automatic debit payments via their personal checking account.)
    Ascent Tuition: Variable rate loans are based on a margin between 2.00% and 11.00% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.069%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 3.82% – 12.82%. Fixed rate loans have an APR range between 5.54% and 14.59%.
    Ascent Independent: Variable rate loans are based on a margin between 4.00% and 12.50% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.069%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 5.49% and 12.77%. Fixed rate loans have an APR range between 7.06% and 13.72%.
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. Click here for a Tuition repayment example.
  4. Flexible repayment plans may be offered with up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount of $2,000. Ascent borrowers who choose a fixed rate option may ONLY select a loan term of five (5) or twelve (12) years (60 or 144 months, respectively). For certain loans with low balances the minimum monthly payment amount may cause the loan amortization schedule to be less than the selected term. Click here for Ascent Tuition cosigned loan current rates and repayment examples.
  5. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments in order to receive the 0.25% interest rate reduction.
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on a number of factors, including: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions, click here for details.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicants ability to supply the necessary information for submission.


* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

5 Important Disclosures for PNC.

PNC Disclosures

  1. Interest will continue to accrue during periods of deferment. You will receive quarterly interest statements during this deferment period. Paying the interest as it accrues each quarter will save you money over the repayment term of the loan because any accrued interest that you do not pay will be added to the principal balance at the end of the deferment period.
  2. If automatic payment is discontinued, you will no longer receive an automatic payment discount. A federal regulation limits the number of transfers that may be made from a savings or money market account. Please contact your financial institution for more information on transfer limitations on savings accounts.
  3. A request to release a co-signer requires that you have made forty-eight (48) consecutive timely payments with no periods of forbearance or deferment within the forty-eight (48) month timeframe. “Timely payment” means each payment is made no later than the 15th day after the scheduled due date of the payment. “Consecutive payment” means the minimum monthly payment must be made for forty-eight (48) months straight without any interruption. To qualify for a co-signer release, the borrower must submit a request, meet the consecutive, timely payment requirements, provide proof of income and pass a credit check.

PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.


6 Important Disclosures for SunTrust.

SunTrust Disclosures

Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.

Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.

SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.

  1. Interest rates and APRs (Annual Percentage Rates) depend upon (a) the student’s and cosigner’s (if applicable) credit histories, (b) the repayment option and repayment term selected, (c) the requested loan amount and (4) other information provided on the online loan application. If approved, applicants will be notified of the rate applicable to your loan. Rates and terms effective for applications received on or after 8/01/2018. The current variable APRs for the program range from 3.876% APR to 12.875% APR and the current fixed APRs for the program range from 5.351% APR to 14.051% APR (the low APRs within these ranges assume a 7-year $10,000 loan, with two disbursements and no deferment; the high APRs within these ranges assume a 15-year $10,000 loan with two disbursements). The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index to your margin. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the Money Rates section of The Wall Street Journal (Eastern Edition). The One-month LIBOR index is captured on the 25th day of the immediately preceding calendar month (or if the 25th is not a business day, the next business day thereafter), and is rounded up to the nearest 1/8th of one percent. The current One-month LIBOR index is 2.125% on 8/01/2018. The variable interest rate will increase or decrease if the One-month LIBOR index changes. The fixed rate assigned to a loan will never change except as required by law or if you request and qualify for the auto pay discount.
  2. Any applicant who applies for a loan the month of, the month prior to, or the month after the student’s graduation date, as stated on the application or certified by the school, will only be offered the Immediate Repayment option. The student must be enrolled at least half-time to be eligible for the partial interest, fully deferred and interest only repayment options unless the loan is being used for a past due balance and the student is out of school. With the Full Deferment option, payments may be deferred while the student is enrolled at least half-time at an approved school and during the six month grace period after graduation or dropping below half-time status, but the total initial deferment period, including the grace period, may not exceed 66 months from the first disbursement date. The Partial Interest Repayment option (paying $25 per month during in-school deferment) is only available on loans of $5,000 or more. For payment examples, see footnote 7. With the Immediate Repayment option, the first payment of principal and interest will be due approximately 30-60 calendar days after the final disbursement date and the minimum monthly payment is $50.00. There are no prepayment penalties.
  3. The 15-year term and Partial Interest Repayment option (paying $25 per month during in-school deferment) are only available for loan amounts of $5,000 or more. Making interest only or partial interest payments while in school deferment (including the grace period) will not reduce the principal balance of the loan. Payment examples within this footnote assume a 45-month deferment period, a six-month grace period before entering repayment and the Partial Interest Repayment option. 7 year term: $10,000 loan disbursed over two transactions with a 7 year repayment term (84 months) and a 8.468% APR would result in a monthly principal and interest payment of $199.90. 10 year term: $10,000 loan disbursed over two transactions with a 10-year repayment term (120 months) and an 8.938% APR would result in a monthly principal and interest payment of $162.92. 15 year term: $10,000 loan disbursed over two transactions with a 15-year repayment term (180 months) and a 9.423% APR would result in a monthly principal and interest payment of $136.90.
  4. The 2% principal reduction is based on the total dollar amount of all disbursements made, excluding any amounts that are reduced, cancelled, or returned. To receive this principal reduction, it must be requested from the servicer, the student borrower must have earned a bachelor’s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student receives more than one degree.
  5. Earn an interest rate reduction for making automatic payments of principal and interest from a bank account (“auto pay discount”). Earn a 0.25% interest rate reduction when you auto pay from any bank account and an extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank checking, savings, or money market account. The auto pay discount will continue until (1) automatic deduction of payments is stopped (including during any deferment or forbearance) or (2) three automatic deductions are returned for insufficient funds during the life of the loan. The extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank account will be applied after the first automatic payment is successfully deducted and will be removed for the reasons stated above. In the event the auto pay discount is removed, the loan will accrue interest at the rate stated in your Credit Agreement. The auto pay discount is not available when payments are deferred or when the loan is in forbearance, even if payments are being made.
  6. A cosigner may be released from the loan upon request to the servicer provided that the student borrower is a U.S. citizen or permanent resident alien, has met credit criteria and met either one of the following payment conditions: (a) the first 36 consecutive monthly principal and interest payments have been made on-time (received by the servicer within 10 calendar days after their due date) or (b) the loan has not had any late payments and has been prepaid prior to the end of the first 36 months of scheduled principal and interest payments in an amount equal to the first 36 months of scheduled principal and interest payments (based on the monthly payment amount in effect when you make the most recent payment). As an example, if you have made 30 months of consecutive on-time payments, and then, based on the monthly payment amount in effect on the due date of your 31st consecutive monthly payment, you pay a lump sum equal to 6 months of payments, you will have satisfied the payment condition. Cosigner release may not be available if a loan is in forbearance.
  7. If the student dies after any part of the loan has been disbursed, and the loan has not been charged off due to non-payment or bankruptcy, then the outstanding balance will be forgiven if the servicer is informed of the student’s death and receives acceptable proof of death. If the student becomes totally and permanently disabled after any part of the loan has been disbursed and the loan has not been charged off due to non-payment or bankruptcy, the loan will be forgiven upon the servicer’s receipt and approval of a completed discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. Loan forgiveness for student death or disability is available at any point throughout the life of the loan.

7 Important Disclosures for LendKey.

LendKey Disclosures

Additional terms and conditions apply. For more details see LendKey


8 Important Disclosures for CommonBond.

CommonBond Disclosures

A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.

Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.

Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
If you are unable to pay your government loan, the government can refer your loan to a collection agency or sue you for the unpaid amount. In addition, the government has special powers to collect the loan, such as taking your tax refund and applying it to your loan balance.

A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If you refinance your government loan, your new lender will use the proceeds of your new loan to pay off your government loan. Private student loan lenders do not have to honor any of the benefits that apply to government loans. Because your government loan will be gone after refinancing, you will lose any benefits that apply to that loan. If you are an active-duty service member, your new loan will not be eligible for service member benefits. Most importantly, once you refinance your government loan, you will not able to reinstate your government loan if you become dissatisfied with the terms of your private student loan.

If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you are a borrower with a secure job, emergency savings, strong credit and are unlikely to need any of the options available to distressed borrowers of government loans, a refinance of your government loans into a private student loan may be attractive to you. You should consider the costs and benefits of refinancing carefully before you refinance.

If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.

Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.


9 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Student Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 4.04%-12.01% (4.04%-11.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 5.25%-12.19% (5.25% – 12.09% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown requires application with a cosigner, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
  2. Multi-year approval funds available for future use are subject to a soft credit inquiry at time of your next request to verify continued eligibility. After we make the initial Loan to you, we may refuse to allow you to take out additional loans under the multi-year approval feature, terms and conditions will be outlined in your promissory note. Please Note: International students are not eligible to receive an offer for multi-year approval. Please Note: International Students are not eligible for the multi-year approval feature.
  3. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  4. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  5. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
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