Private Loans
Repayment
- Private student loans typically have variable interest rates. The interest rate is tied to an index, such as LIBOR or PRIME, plus a margin.
- The Prime Lending Rate is the interest rate lenders offer to their most creditworthy customers. A rate of LIBOR + 2.8% is roughly the same as PRIME + 0.0%.
Comparison Example of Two Private Loans Based on a $10,000 Loan With Two Disbursements
| Lender 1 | Lender 2 | |
|---|---|---|
| APR | 10.55% | 9.64% |
| Interest Rate | LIBOR + 9.75% | LIBOR + 9.75% |
| Disbursement Fee | 3% | 3% |
| Monthly Interest Payment (In-School and During Grace) | Four Payments of $42.92 (Following First Disbursement); and 47 Payments of $85.83 (Following Second Disbursement) | No payments. |
| Monthly Principal and Interest Payment (Following Graduation) | $170.99 | $155.88 |
| Repayment Term (In Months) | 84 | 180 |
| Total Amount Paid | $18,569.30 | $28,058.51 |