There come a few changes of federal student loans at California State University (Los Angeles): to be eligible for federal student loans, you have to hold a high school diploma or an equivalent which is accredited, otherwise, you will be sifted out. Plus, the students’ EFC (expected family contribution) level reduces to $23,000 from $32,000 in previous years. Another great change is about subsidized loans. Before, you are not responsible for the interests on a Direct Subsidized loan within the 6-month grace period, but you are now obligated to pay for them according to the recent change, and the fixed rate of 3.4% may increase to 6.8% (still pending). Meanwhile, the subsidized loans are not available to graduates and professional students any more.
All these recent changes may have a great impact on the private unsecured student loans, that is, the private unsecured student loans are probably in great demand in the future. Students who are not eligible for federal student loans or feel the federal student loans are insufficient to cover all the college expense may need such private loans.
The university provides some information about private student loans, such as informing students of the drawbacks. Private student loans are actually inferior to federal student loans, despite the great changes of federal student loans recently. Private lenders require a good credit history. If you have a poor credit score or have no credit history at all, a co-signer is often required to get approved. And the interest rate provided by private lenders is usually higher than federal student loans. Some lenders promise to loan you money without credit check and a co-signer, yet the interest rate will be extremely higher than the average level.
However, a private student loan is still a choice for those who really need it. Here are some reputable private lenders:
Sun Trust
You can choose either variable rates or fixed rates at Sun Trust. The variable rate ranges from 2.25% to 9.86%, and the fixed rate ranges from 3.75% to 12.25%. The most favorable rate is available to those with an excellent credit rating. If your credit score is damaged or you have no credit history, you can find a co-signer with a good credit history. Signing with a co-signer is highly recommended but not essentially required at Sun Trust.
A co-signer can help you a lot, yet he/she takes financial responsibility, which means he/she has to make the payments once you default on the loan. So you’d better release your co-signer if the lender allows. Sun Trust allows you to release your co-signer if you have made the first and consecutive 48 payments on time.
The maximum loan amount at Sun Trust depends on the Cost of Attendance of your school and the financial aid that you have already earned. The Cost of Attendance at California State University varies on the basis of student types. The overall Cost of Attendance for residents in California is $17,675 (commuters), $23,726 (on campus) or $25,403 (off campus). While for non-residents, the total is $26,603 (commuters), $32,654 (on campus) or $34,331 (off campus).
Say you are a commuter student residing in California. Your total Cost of Attendance is $17,675, and the financial aid that you’ve received is $5,000. Then you are able to borrow a private student loan up to $12,675 at Sun Trust.
There is no origination fee at Sun Trust and the grace period is often six months. Your interest rate will be reduced by 1% due to graduation and 0.25% for automatic payment. The repayment term is flexible – 5, 10, 15, and 20 years, while the term of 15 and 20 years only applies to loans over $5,000. You can choose any repayment options among Immediate Repayment, Interest-Only Repayment, Partial Interest Repayment and Full Deferment.
In order to qualify for private student loans at Sun Trust, you must meet some requirements: you should be an American citizen or a permanent resident, and at least a half-time student; the minimum age is 17 years old (the legal age in California is 18 years old); your permanent address should not be in Illinois, Iowa, or Wisconsin.
Union Federal
Union Federal provides variable rates only ranging from 2.871% to 7.410% for graduates and 2.87% (the lowest rate) for undergraduates. A discount of 0.25% can be obtained when you choose the automatic payments, and an additional 0.25% discount is available due to timely payments. Yet unlike Sun Trust, Union Federal’s maximum repayment term is only 15 years.
There is no origination fee or prepayment fee at Union Federal. You can borrow up to $65,000 or the Cost of Attendance minus existing financial aids, whichever is less. The minimum is limited to $2,000. As the most expensive Cost of Attendance at California State University is $34,331, the loan amount of $65,000 seems untouchable.
Credit history of 21 months is required at Union Federal. If you have no credit history, a co-signer is then needed during the application process, otherwise, you may be denied. Once the co-singer is found, the most attractive rate is available to you. To release your co-signer, you have to make the fist and consecutive 36 payments on time.
Besides, you should be enrolled at least half time, and income proof is required as well. The minimum age limit is also 17 years old. Meanwhile, you should be a U.S. citizen or a permanent resident. But when an eligible co-signer is invited to join the loan successfully, your income proof is not required and even non-US citizen is considerable.
Apart from a co-signer, Union Federal also needs a personal reference, in case that the lender fails to contact with you or your co-signer. Your personal reference should be at least 18 years old and your co-signer can’t be your personal reference.
Try to make your payment on time, because if you miss a payment today, it will be regarded as a default tomorrow, and even worse, this adverse record will be reported to credit bureaus 30 days after the default. In that case, your credit history or your co-signer’s credit history will be damaged for as long as 7 years. There are four repayment options – Immediate Repayment, Interest Only Repayment, Student Starter Repayment and Full Deferment Repayment.
CU Student Loans
You can take out a private student loan at CU Student Loan ranging from $2,000 to $120,000 for undergraduate students or $160,000 for graduated students. The lowest interest rate is 2.99%, and the highest is 8.99%. Once you find the loan is not favorable, you can cancel it within 30 days with no penalties.
During the full repayment period, when you have paid down 10% of the loan, you will enjoy 1% rate reduction. To reduce your interest rate at the beginning, your credit history must be pretty good, and if not, a co-signer is necessary since the rate of 8.99% for a student with no other incomes is literally horrible. If you have use a co-signer, do remember to release him/her when you have made 24 consecutive payments on time.
The highlight in terms of rate deduction at CU Student Loan is that your academic grade is considered as well besides credit history. That’s good news for those who have a good grade.
The repayment term is limited to 10 years which starts from the 6th month after the graduation. Only two repayment options are available at CU Student Loans, including Interest Only Repayment and Proactive Repayment.
Charter One
There are three repayment options at Charter One, which have an impact on the loan rate. Both fixed rate and variable rate are available: the fixed rate ranges from 6.75% to 11.75% for Immediate Repayment and Interest Only Repayment, 7.5% to 12.25% for Deferred Repayment; the variable rate ranges from 2.99% to 9.29% for Immediate Repayment and Interest Only Repayment, 5.29% to 9.54% for Deferred Repayment. A creditworthy co-signer will help you get the lowest rate, and you could release your co-signer by making 36 timely payments consecutively.
When you opt for automatic repayment, you will qualify for a discount of 0.25% if you have a non-citizen bank account, and 0.5% if you have a Charter One account. This benefit at Charter One is quite different from other lenders.
You may pay back the loan in a 5-year repayment term, 10-year repayment term or 15-year repayment term. In addition, providing that you want to repay the loan in advance, no penalty is charged at Charter One.
When you visit the official website of California State University, you may find out that the federal student loan rate is around 5%. Go back to the four lenders that I have introduced. The lowest rate arrives at as low as 2.25%, which is far less than the federal student loan rate. To be qualified for the lowest rate, you or your co-signer must hold the best credit history. My point is if you have the advantage of perfect credit history, you can choose the private unsecured student loans other than the federal counterparts. Just make sure that you pay off the monthly payments on time.
