If you’re planning to contribute to your child’s tuition, Wells Fargo has a parent loan that could help.
The bank’s Student Loan for Parents is available to anyone whose child is enrolled in college at least half-time.
Although this loan has some appealing features — especially if you already bank with Wells Fargo — it might not be the best student loan option for everyone.
Consider these pros and cons to determine if the Wells Fargo Student Loan for Parents is right for you and your family.
Pro: You could get a lower interest rate than a Parent PLUS Loan
When it comes to borrowing on behalf of your child, you have two main options: a private loan, like a Wells Fargo parent loan, or a federal Parent PLUS Loan.
Parent PLUS Loans come with a fixed interest rate of 7.00% and an origination fee of 4.264%.
Wells Fargo private student loans for parents, on the other hand, have a range of rates and no origination fees. As of January 2018, fixed APRs range from 6.49% to 12.99%, and variable rates range from 5.24% to 11.74%.
The rate you ultimately qualify for depends on your creditworthiness as a borrower. The stronger your credit, the lower your interest rate will be.
If you have good credit, you could snag a rate that’s significantly lower than the one you’d get on a Parent PLUS Loan. Lowering your interest rate is the best way to reduce your overall costs of borrowing.
Combine a low interest rate with no origination fee, and you could save a serious chunk of money by opting for a Wells Fargo parent student loan over a Parent PLUS one.
Con: The interest rates might not beat other private lenders
Although the interest rates on a Wells Fargo private student loan could beat out a Parent PLUS Loan, they’re not necessarily the lowest on the market.
SoFi Parent Loans, for example, have fixed APRs that range from 4.25% to 8.00%. Their variable rates start at 4.02% and go up to 7.44%. That means you could potentially get a lower rate on a SoFi Parent Loan than on a Wells Fargo one.
Although it’s easy to get a rate quote with SoFi, unfortunately, Wells Fargo doesn’t reveal your rate until you submit a full application — and agree to a hard credit check in the process.
Although it’s worth shopping around with other lenders, you can’t know what interest rate you’d get with Wells Fargo until after you apply.
Pro: Wells Fargo offers interest rate discounts and low fees
If you borrow from Wells Fargo, you could get a discount on your interest rate. First, you could snag one of the following three discounts:
- 0.25% discount if you have a qualifying Wells Fargo checking account
- 0.25% discount if you already have a student loan with Wells Fargo
- 0.50% discount if you participate in the Portfolio by Wells Fargo program. (Note that this program has a $30 per month fee, unless you make $25,000 or more in linked bank deposits or have $50,000 or more in qualifying balances.)
On top of these discounts, you could get an additional 0.25% rate cut for setting up autopay. Note that most lenders, federal and private, offer this same autopay discount.
Let’s say you qualified for the banking customer discount and the autopay discount. Your interest rate could go from 7.00%, for example, to 6.50%. On a $20,000 loan over 10 years of repayment, that 0.50% reduction could save you $614 in interest.
Besides interest rate discounts, another pro of Wells Fargo private student loans are their low fees. There’s no fee upon application or disbursement, nor do you have to pay a penalty for paying off your loan early.
That being said, customers have complained about unfair late fee penalties, which you’ll learn more about below. But assuming you don’t run into any unfair assessments, this reasonable fee structure, along with the interest rate discounts, could save you money as a borrower.
Con: Your borrowing limit maxes out at $25,000
Wells Fargo private student loans have a maximum borrowing limit of $25,000 for parents. Plus, you can’t have more than $100,000 in combination with other education-related debt.
So if you’ve already borrowed $80,000, your limit for a Wells Fargo private student loan goes down to $20,000.
This limit is low compared to a Parent PLUS Loan, which lets you borrow up to the cost of attendance at your child’s school, minus any other financial aid you’ve already received.
If you don’t need to borrow more than $25,000, this might not be a problem. But if you’re looking for additional funding, Wells Fargo might not meet your needs.
Pro: You have up to 15 years to repay
If you go with a Wells Fargo parent loan, you have up to 15 years to pay it back. As long as your child’s college accepts the loan, you’ll automatically go on the 15-year plan.
That’s not to say you can’t pay the loan back sooner. If you make extra payments, you could get out of debt years ahead of schedule. Although you don’t have the option of choosing a shorter term, you won’t face a penalty for paying the loan off early.
And if you’re looking for low monthly payments, a 15-year plan could help. If you took out $20,000 at a 6.00% interest rate, for instance, your monthly payment would be just $169 over 15 years.
That long repayment term can help if you’re working on a tight budget, while the option to pay it off faster could save you money on interest.
Con: You can’t fully defer payments while your child is in school
Although Wells Fargo private student loans come with a long repayment term, they don’t have tons of other options for repayment.
For example, you can’t defer payments while your child is in school. Nor do you have the option of forbearance or reduced fixed payments. Your only alternative to immediate repayment is interest-only payments for up to 48 months.
So if you get the loan when your child first enters college, you could make interest-only payments until the end of their sophomore year. After that, you’d be expected to make the usual monthly payments until the loan is fully paid off.
If you need more flexibility, you might explore other lenders. But if you can swing immediate repayment, this policy might not be a major drawback.
Pro: You have options for applying online or over the phone
Wells Fargo has a straightforward application process, which you can access online or over the phone. You’ll provide basic personal information, as well as upload any required documents.
Some other private lenders only allow online applications, so Wells Fargo’s phone support might be an appealing feature. It’s available 24 hours per day, seven days per week.
And if you’re already a Wells Fargo customer, you’ll likely be familiar with navigating the website.
Con: Wells Fargo has a history of misleading borrowers
Although Wells Fargo has an easy application process, its history of lending raises some red flags.
According to the Consumer Financial Protection Bureau, Wells Fargo charged illegal fees to borrowers. It also misled them about payment information and failed to update information to the credit bureaus.
In the end, Wells Fargo paid $410,000 to borrowers and $3.6 million to the CFPB after reaching a settlement agreement.
Unfortunately, Wells Fargo private student loan reviews on Consumer Affairs and the Better Business Bureau still reveal a number of problems with the lender, including unhelpful customer service and unfair late fees.
Is a Wells Fargo private student loan right for you?
Wells Fargo private student loans have a number of benefits, including competitive interest rates, low fees, and a straightforward application.
But if you’re looking to lower the costs of borrowing, shop around for the best rates before choosing a lender. Also, be aware that Wells Fargo doesn’t have the best reputation for working with student loan borrowers.
If you’re already a Wells Fargo banking customer, you might have a good relationship with the bank. But if you’re a new borrower, weigh the pros and cons of multiple lenders so you can choose the right one for your needs.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
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.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
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.
* 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 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.
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.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
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.
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 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 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
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.97% – 12.97%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|4.00% – 13.00%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents||Visit Citizens|