College students who have hit their federal borrowing limits were likely to pay lower rates in November when turning to private student loans, a new analysis shows.
Borrowers with excellent credit seeking to take out private student loans through the Credible marketplace last month qualified for lower rates on both fixed- and variable-rate loans than in October.
For borrowers with credit scores of 720 or higher selecting a lender through the Credible marketplace during November:
- Rates on 10-year fixed-rate student loans averaged 6.10%, down from 6.71% in October, and 6.23% a year ago.
- Initial rates on 5-year variable-rate student loans averaged 3.37%, down from 4.70% in October and 5.79% a year ago.
Using an online tool like Credible makes it easy to compare private student loan interest rates from multiple lenders in one place.
The chart above shows average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender. The chart shows average monthly rates for the last 3 years.
While federal student loans have fixed interest rates, private lenders usually offer a choice of a fixed- or variable-rate student loan. A variable-rate loan often provides a lower interest rate at the outset, but your rate can go up or down depending on economic factors.
Whether you’re taking out a fixed-or variable-rate private student loan, the interest rate can qualify for will depend on factors like your credit score, the type of loan you’re seeking (fixed or variable rate), and the loan repayment term. Since many students haven’t established a history of earnings and credit, most private student loans are cosigned.
The chart above shows rates are often lower on cosigned loans, and higher on loans with longer repayment terms.
Because lenders all have their own methods of evaluating borrowers, it’s a good idea to request private student loan rates from multiple lenders so you can compare your options.
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Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 3,700 positive Trustpilot reviews and a TrustScore of 4.7/5.