Graduate Private Student Loan Interest Rates
How is a graduate private loan interest rate calculated?
Private student loan interest rates are calculated based on a published index such as the Prime Rate or LIBOR (London Inter Bank Offering Rate) plus a margin based on credit score and credit history. If a cosigner is required, loan approval and your interest rate will be determined based on your credit, and your cosigners' credit. In some cases, the cosigner is optional for graduate students applying for a private loan.
Because the interest rate on a grad private loan is variable, it will fluctuate over time. Interest begins accruing when the loan is disbursed.
Understanding your interest rate
It's difficult to determine your exact rate unless you apply for a graduate private student loan. At which point you and your cosigners credit will be checked and your rate will be determined.
However, you can get a feel for where your general interest rate is based on your credit report, which you can obtain for free from AnnualCreditReport.com. The more late payments, overdrawn accounts, and other credit issues there are, the more likely it is your interest rate will be higher.
We always recommending checking your credit report and ensuring that it's free of errors, omissions, and inaccuracies before applying for any student loan so that you get the best interest rate possible.
Ways to lower your interest rate
In many cases, private student lenders offer discounts to borrowers who use automatic checking account withdrawal, or complete a specific number of consecutive on-time payments. This can translate into significant savings over the course of repayment. The typical discount is .25% for signing up for automatic debit. It is recommended that you contact your lender for a full list of interest rate discounts.