Selecting a Private Loan Lender

For many students, one of the realities of attending college is borrowing a private student loan - a loan from a bank or private lender.

Choosing a lender is a personal decision based on your individual needs. Many schools have a "preferred lender list" made of lenders they feel offer a good combination of price and service. When comparing lenders and the loans they offer, here are some things to consider:

  • Fees - What additional fees are charged by the lender? For example, some lenders may charge origination fees or late fees.

  • Interest rate - What is the interest rate offered?

  • Capitalization - Is the interest on your loan capitalized quarterly, annually or at the end of the loan period? As we learned a few minutes ago, the capitalization schedule can greatly affect your total debt. The more often your loan is capitalized, the more expensive it will be.

  • Consequences of late payments - How will a missed payment or two effect your interest rate? Benefits of on time payment - Are there interest rate reductions for making on time payments or for completing your degree?

  • Benefits of on time payment - Are there interest rate reductions for making on time payments, completing your degree, or making automatic payments?

  • Co-signer release - Is a co-signer required for the loan? If so, does the lender offer a way for the co-signer to be released from the obligation over time?

  • Customer service - Does the lender have an "800" number? Do they have an easy to use website?

  • Deferments - Does the lender offer to defer payments if you choose to attend graduate or professional school?

  • Prepayments - Is there a penalty for paying off your loan early?

Choosing your lender is a serious decision with long-term consequences. We suggest you research all your options before making your selection. Overall, when comparing lenders, we recommend selecting the lender that offers good rates, fees and repayment options, along with a demonstrated commitment to education financing and customer service.

PNC has been providing education financing for over 48 years.

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