Study: At 70% of U.S. Colleges, Tuition and Fees Are Higher Than Undergrad Loan Limits

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

cost of college
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

For college students paying for their degrees with loans, federal student loan limits can be a rude awakening.

These limits on Direct Subsidized and Unsubsidized Loans are set by Congress and were last increased a decade ago. Meanwhile, college tuition rates at public four-year colleges have risen by 37% in the past 10 years, based on figures from The College Board.

With costs rising and borrowing limits remaining static, students are often left scrambling to cover all their expenses. How does student access to loans measure up to college prices? To find out, we compared the costs at over 1,700 U.S. colleges to federal student loan limits for undergraduates.

Key findings: Student loan limits don’t match college costs

  • College costs are outpacing federal student loan limits. Undergraduates can only borrow between $5,500 to $12,500 in federal loans per academic year. Yet only 1.55% of U.S. colleges have tuition and fees low enough that a dependent freshman could afford them using only these loans.

  • Tuition and fees exceed federal loan limits by $11,000 or more. Even after maxing out federal student loans, the remaining costs were significant: $11,177 up to $18,177, on average.

  • Independent students’ access to higher loan limits makes a difference. Independent students, especially those in their third and fourth years, were more likely to be able to borrow enough to cover college costs. Three in 10 colleges charged tuition and fees that could be covered by the $12,500 loan limit offered to these students.

Federal student loan limits for undergrads range from $5,500 to $12,500 per year

Direct Subsidized and Unsubsidized Loans are the only federal student loans offered directly to undergrad students. But these students can only borrow up to certain annual limits.

Dependent students in their first year can borrow the least, with an annual federal student loan limit of $5,500. Independent upperclassmen, on the other hand, can access as much as $12,500 in Direct Loans per academic school year.

Another limit applies, as well: the college’s reported cost of attendance. Students cannot borrow more than what a college estimates it should cost to enroll in and attend its programs.

Students can only borrow up to their cost of attendance or Direct Loan limit, whichever is lower.

College costs are higher than what students are allowed to borrow

It’s rare to find a four-year U.S. college where the cost of attendance is lower than the limits set on Direct Subsidized and Unsubsidized Loans.

The average college cost for an in-state student at a four-year public institution, for example, is $9,650.

That’s well above the borrowing limits for dependent students, and just above the limit set for independent freshmen. But that figure doesn’t even include other expenses that are often associated with the cost of attendance, such as room and board, transportation, textbooks, and other school supplies.

This means that even if undergraduates max out their available federal student loans, many will still have college costs left over to cover. And they’ll have to look to other funding sources to figure out how to pay for college.

70% of colleges’ tuition and fees exceed undergrad borrowing limits

For students who plan to only borrow enough to cover educational costs, will Direct Subsidized and Unsubsidized Loans be sufficient?

In our study, we wanted to see how the cost of attendance at different colleges compares to federal limits on undergraduate student loans. To do so, we surveyed the annual education expenses at 1,744 U.S. colleges that grant four-year degrees or equivalent certifications. Specifically, we looked at tuition, fees, and textbook costs.

The results reveal that few colleges have tuition and fees that a student can cover with Direct Subsidized and Unsubsidized Loans alone. Here’s the percentage of colleges at which costs fall below undergrad student loan limits.

6% of colleges have tuition and fees that fall below dependent student borrowing limits

Most college students under 24 are considered dependents under federal student aid rules. As a result, they’ll face lower borrowing limits. Yet the number of colleges at which these dependent students can use their Direct Loans to fully cover costs is shockingly low.

Just 27 colleges, or 1.55%, have costs that dependent freshmen can cover with Direct Loans. For dependent upperclassmen, this amount increase to 104 colleges (6%).

Here are the 27 colleges at which tuition and fees fall below borrowing limits for undergraduate students.

Berea College in Berea, Ky. Indian River State College in Fort Pierce, Fla. Aspen University in Denver
College of the Ozarks in Point Lookout, Mo. The Colburn School Conservatory of Music in Los Angeles Georgia Gwinnett College in Lawrenceville, Ga.
Brigham Young University–Idaho in Rexburg, Idaho Ohio University–Lancaster in Lancaster, Ohio Nevada State College in Henderson, Nev.
Valencia College in Orlando, Fla. Palm Beach State College in Lake Worth, Fla. Brooklyn College in Brooklyn, N.Y.
State College of Florida Manatee-Sarasota in Bradenton, Fla. Abraham Baldwin Agricultural College in Tifton, Ga. Columbia Southern University in Orange Beach, Ala.
New Charter University in Salt Lake City Ohio University–Chillicothe in Chillicothe, Ohio Elizabeth City State University in Elizabeth City, N.C.
Polk State College in Winter Haven, Fla. Shiloh University in Kalona, Iowa Simmons College of Kentucky in Louisville, Ky.
St. Petersburg College in St. Petersburg, Fla. Apex School of Theology in Durham, N.C. Harrison Middleton University in Tempe, Ariz.
Alice Lloyd College in Pippa Passes, Ky. Midwives College of Utah in Salt Lake City Dalton State College in Dalton, Ga.

Independent students can borrow enough to pay tuition at 30% of U.S. colleges

On the other end, however, the $12,500 limit for independent upperclassmen is high enough that far more colleges pass this bar. Of the 1,744 colleges surveyed, 532 (30.5%) charge tuition and fees low enough that these students can pay them with Direct Subsidized or Unsubsidized Loans alone.

After maxing out loans, undergrads’ remaining tuition and fees are $11,000 or more

Surprisingly, few colleges have educational costs that students can cover with federal student loans. But on top of this, the gap between what students can borrow and the tuition, fees, and textbook costs they must pay are staggeringly high.

Here’s how much college tuition and fees exceed student loan limits, on average.

Among all classes, dependent freshmen see the largest gap between college costs and Direct Loan limits. If these students borrow the maximum $5,500, they’ll still face $18,177 in additional educational costs, on average.

Independent juniors and seniors are the best off, with the option to borrow up to $12,500 in Direct Loans per academic year. Yet even these students will have $11,177 in remaining costs after borrowing the maximum amount in federal loans.

Paying with federal loans? Choose a public college

If you’re a college applicant planning to pay for school primarily through Direct Subsidized and Unsubsidized Loans, your funds will go much further at a public college versus a private college, our study reveals.

Subsidized by state or local governments, public colleges are more affordable than colleges owned and operated by private entities. Our recent college cost study found that a course credit is priced 3.2 times higher at a private institution than at a four-year public school.

With lower prices, this also means that public colleges are more likely to have tuition costs that fall below federal borrowing limits, our study found. This assumes, however, that the students pay in-state rates.

Even among public colleges, the portion of schools at which students can cover costs with only Direct Subsidized and Unsubsidized Loans is low. Just 2.5% of public colleges have costs of attendance below the $5,500 borrowing limit for dependent freshmen.

But for independent students, public college costs are much more manageable. Independent upperclassmen’s $12,500 in student loans would be enough to cover costs at about 80% of public colleges.

These figures are abysmal at private colleges, however. The borrowing limit for Direct Subsidized and Unsubsidized Loans cover educational costs at 1.18% of private colleges if you’re a dependent freshman. For independent upperclassmen, those loans would cover costs at 7.35% of private colleges.

Students at public colleges will also face much smaller gaps between available loans and leftover tuition and fees. In fact, the average independent sophomore, junior, and senior will face tuition and fees below their loan limits.

At private colleges, however, dependent freshmen face $24,479 in average costs above their $5,500 loan limit. That’s $19,710 more per year than the average costs a dependent freshman at a public college would face after maxing out their loans.

How students can cover their leftover college costs

Overall, this study reveals a shockingly wide gap between the federal funding offered to undergraduates and the costs these students face. More of today’s students are unable to cover all their college costs by borrowing federal student loans.

When students max out their federal loans, they have to look for other ways to pay for college:

  • In addition to loans, other forms of student aid can be a huge help in paying for college. The average student aid gifted to a public college student was $7,010 in 2014-2015. Private college students received $19,960 on average. Students should file the FAFSA to be considered for federal grants. They should apply for state and private scholarships, too.

  • Parent PLUS Loans are another common solution for students whose costs are higher than what they can borrow. These are federal student loans offered to parents of college students. Parents can borrow up to the student’s cost of attendance minus other aid. However, PLUS Loan interest rates and fees are higher than those charged to undergrads.

  • Private student loans are another way to borrow more money for college. Unlike federal student loans, however, private lenders will require a good credit score and solid borrowing history from applicants. Students will likely need to apply with a cosigner to qualify for a private loan.

  • Raising your federal student loan limits might also be an option. See if you can meet the requirements to be considered an independent student on the FAFSA. Dependent students can also borrow up to the limits set for independent students if they have a parent who was denied a Parent PLUS Loan.

Overall, our study underlines the fact that the federal student loans offered to undergraduates are often insufficient to cover college costs. While Congress might take on the task of adjusting student loan limits at some point, it’ll largely be up to students to find a way to afford college.

The best way to do so is to learn about these limits and find alternatives to student loans. Students and parents who are aware of the discrepancy between college costs and loan limits will be better prepared to find other ways to pay for a degree.

Methodology: Student Loan Hero surveyed the costs at four-year colleges in the U.S. based on the most recent data supplied by Peterson’s. Educational costs including tuition, fees, and textbooks were compared to federal borrowing limits on Direct Subsidized and Unsubsidized Loans for undergraduates. Only colleges in the 50 states and D.C. with complete pricing data were included in the 1,744 colleges analyzed in this study.

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.
3.69%
10.94%
1
Undergraduate, Graduate, and ParentsVisit CollegeAve
3.82% – 12.82%3Undergraduate and GraduateVisit Ascent
4.34%
12.99%
2
Undergraduate and GraduateVisit Discover
4.12% – 10.98%*,4Undergraduate and GraduateVisit SallieMae
5.03% – 11.23%5Undergraduate and GraduateVisit PNC
3.88% – 12.88%6Undergraduate and GraduateVisit SunTrust
4.72% – 9.81%7Undergraduate and GraduateVisit LendKey
3.72%
9.68%
8
Undergraduate, Graduate, and ParentsVisit CommonBond
4.04%
12.01%
9
Undergraduate, Graduate, and ParentsVisit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.