- Competitive rates. Because banks are typically more established than most online lenders and can afford to offer lower rates, you could end up with a much more competitive APR – provided you meet the credit requirements or have a qualified cosigner.
- Less risky. Being established has an additional benefit: There’s less of a chance that a bank will be shut down or stop its student loans program without notice.
- Loyalty perks. Banks tend to value loyalty in a way that other lenders don’t. If you already have an account with a bank, your loan application process could be faster and you could be eligible for loyalty discounts like the interest rate reduction that Citizens Bank and SunTrust offer.
- Applying without a cosigner. Even if you can qualify on your own, applying with a cosigner that has a stronger credit history can help you get much lower rates. Look for a bank that offers cosigner release so you can take them off your loan once you’re able to match the bank’s credit requirements on your own.
- Not reading over your application. Banks reject loan applications over inconsistencies and mistakes more often than you think. Don’t let a typo get in the way of paying for school. Give your application a once-over before you hit submit.
- Not knowing your credit score. Since some banks require both the borrower and cosigner to meet certain credit requirements, knowing your credit score can help you figure out which bank you’re eligible with. You can check your credit score online for free or request a copy of your credit report from one of the top three credit bureaus: TransUnion, Equifax and Experian.
- Ignoring the turnaround time. Private student loans typically take at least a month to process. If your school has a deadline for financial aid outside of federal aid, make sure you apply well in advance so that your loans can get there in time.
- Letting your grades drop. While Discover is the only bank that https://maxloan.org/installment-loans-tn/ rewards good grades, some require you to maintain satisfactory academic standing to be eligible – usually at least a 2.0 GPA.
Bottom line
It can be more difficult to qualify for student loans or refinancing from a bank, but they offer some of the most competitive interest rates around. If you’re not used to dealing with lending, it can be comforting to keep all of your finances in one place – plus, you could get a discount.
Interested in learning about more options? Ready to compare lenders? Check out our guide to student loans to see what else is out there when it comes to financing your education.
Frequently asked questions
Many banks set lifetime limits on how much students can borrow, depending on the degree. Some of theses limits include federal loans, while others only include financing from that particular institution. If you need a lot more than what your federal loans can cover, you might want to look for a bank that doesn’t include federal loans in its lifetime limit.
Some use a third-party company to handle repayments, while others take care of it themselves. It’s not something banks always advertise, so you might have to reach out to your bank to find out how repayments work.
Generally, no. Most private lenders have standard fixed repayment plans – which can be unaffordable to a new graduate with a high debt load. If you’re concerned about affording repayments right away, look for a bank like Discover that offers more forgiving repayment options that can ease the burden of those high fixed repayments.