Private Student Loans - requesting recommendations

**SwirlingFloater** · 01-16-2013, 08:14 AM

I have a niece heading to college next year and her mother and father aren't sure where they should look for student loans. (She is planning to start at DMACC and then transfer to ISU.)

I am not up to speed on the best places to look these days.

I told them I would recommend talking to the financial aid people at DMACC for recommendations.

Do any of you have recommendations where to look? Their local bank? Iowa Student Loan?

Thank you!

**IcSyU** · 01-16-2013, 08:19 AM

Go through the federal government. Places like Wells Fargo will give you private loans but the interest rates are astronomical compared to something like the Stafford Loans.

Additionally, through the federal government you get a little more protection when time to pay them off comes. Can't make the payments? They'll work with you on a consolidation plan that will fit both parties. Private lenders for the most part aren't nearly as forgiving.

**Three4Cy** · 01-16-2013, 08:26 AM

Her family needs to complete a FAFSA. This will help determine if they are eligible for federal student loans.

**troyisu** · 01-16-2013, 08:49 AM

Trust me (from personal experience)...try and go through Fed first. I had a few loans through IA Student Loan and the interest rates are atrocious...

I can handle the 2% or whatever through the Federal Loans, but some Private Loans through IA Student Loan are at 7 to 8%...not cool...

**benjay** · 01-16-2013, 08:51 AM

FAFSA is what you need as mentioned.

If she does not qualify for all she needs, then shop around just like you would for a car loan. I borrowed some from these guys:

Iowa Student Loan

But the interest rate sucked.

**iahawkhunter** · 01-16-2013, 08:51 AM

Originally Posted by troyisu

Trust me (from personal experience)...try and go through Fed first. I had a few loans through IA Student Loan and the interest rates are atrocious...

I can handle the 2% or whatever through the Federal Loans, but some Private Loans through IA Student Loan are at 7 to 8%...not cool...

Federal loan rates aren't great either right now.

http://www.finaid.org/loans/*******/interest.cgi (current through June 2012)
EDIT: The *****s are for "s c r i p t s" (no spaces in the actual link)

http://www.nytimes.com/2012/09/15/yo...anted=all&_r=0

**benjay** · 01-16-2013, 08:53 AM

Another important detail about private loans: They will require a co-signer. Federal loans do not.

**Senolcyc** · 01-16-2013, 08:54 AM

DMACC is cheap. The kid should work non-stop all summer and save, and have a job during school year, too. That and some extra work for the parents should cover it. Shouldn't need a loan for community college.

**SwirlingFloater** · 01-16-2013, 08:58 AM

Originally Posted by Senolcyc

DMACC is cheap. The kid should work non-stop all summer and save, and have a job during school year, too. That and some extra work for the parents should cover it. Shouldn't need a loan for community college.

I agree that not borrowing is ideal. I had some scholarships and worked way back when I was in school so I was fortunate and never had to do the student loan gig.

My niece wants to be a school teacher and intends to work at a daycare when she is going through school, but daycare employees typically don't make much above minimum wage from what I understand.

**cytech** · 01-16-2013, 09:05 AM

Originally Posted by IcSyU

Go through the federal government. Places like Wells Fargo will give you private loans but the interest rates are astronomical compared to something like the Stafford Loans.

Additionally, through the federal government you get a little more protection when time to pay them off comes. Can't make the payments? They'll work with you on a consolidation plan that will fit both parties. Private lenders for the most part aren't nearly as forgiving.

I can attest to this I had private loans through Iowa student loan. I had some issues when I first left school back in 2004 and defaulted on my loans. The federal ones were very easy to rehab. While when I contacted the people at Iowa Student Loan all they would take is the entire balance. There were no rehab options at all. I refinanced with my parents help after that.

**kilgore_trout** · 01-16-2013, 09:12 AM

I'd rather swim buck naked across the Ganges river with a paper cut on my nipple than do business with Iowa Student Loan again.

**nfrine** · 01-16-2013, 10:14 AM

Loan rates for graduate students have escalated dramatically over the past 5 years. My son got rates around 2.5 to 3.0% when he started med school. By the time he completed the new loans were greater the 5%. My daughter is currently in dental school. The best loans rates available are 6.8%...most are over 7%. Just as importantly, very little of the interest is deferred until graduation...

At the same time, I can get 2.0% interest on a 5 year CD if I am lucky. The federal loan program's cost of money has really inflated since 2008.

**Cyclophile1** · 01-16-2013, 10:31 AM

Originally Posted by nfrine

Loan rates for graduate students have escalated dramatically over the past 5 years. My son got rates around 2.5 to 3.0% when he started med school. By the time he completed the new loans were greater the 5%. My daughter is currently in dental school. The best loans rates available are 6.8%...most are over 7%. Just as importantly, very little of the interest is deferred until graduation...

At the same time, I can get 2.0% interest on a 5 year CD if I am lucky. The federal loan program's cost of money has really inflated since 2008.

Yeah, it's all relative. Twenty years ago when I was paying off my grad school loans I think the interest rates varied between 9% and 11%, all the while this was with my dad telling me "Could be worse like in the Carter years." The idea of having student loans with a rate of 2.5% is just amazing. I can see the rates rising because the system is broke and is poised to be the next big bailout crisis.

My advice after paying all that interest would be to only take out the loan as a last resort and only HALF what you think you need.

**ISUCyclones2015** · 01-16-2013, 10:48 AM

I have two student loans currently.

U.S. Bank gave me a 5.1% Loan (Now they don't do Student Loans anymore)
Discover Student Loans was the best this past year at 6.8% for me.

Wells Fargo was 9% and 11% each time I applied.

Oh and I don't qualify for any federal programs.... any.

**JWIL4CY** · 01-16-2013, 10:56 AM

Did her parents not save any money for her college?? Absolutely do not let her take out any student loans. That would just be setting herself up for financial failure.