Private Loans

Private loans typically have higher interest rates than federal loans depending on the credit quality of the buyer. They can have variable or fixed rates. LoanMajor likes to use fixed rates for its calculators because there is no variability in payments and interest rates are at historical lows so variable rates may be increasing in the near future. The uncertainty surrounding the future interest rates in private loans will make borrowers’ payments change, which makes it difficult to make a plan. There are many different private loan borrowers to choose from and student loan platforms like Credible allow you to compare rates and terms from different lenders. Compare Private Student Loans with Credible to find the best rate without affecting your credit.


If the borrower is going for undergraduate studies, a cosigner is often needed because the student has little to no credit. This also helps lower the interest rates if your cosigner has good credit. Private loans should almost always be the last resort for undergraduate borrowers because Stafford loans and Perkins loans usually have lower interest rates. One upside to private loans is that some have incentives where users get discounts for good grades, and they do not often have origination fees.

For graduate studies, it is a little different. There are situations where private loans have lower interest rates than PLUS loans because the borrower can already have strong income and high credit from years in the work force. These need to be explored carefully to come up with the best options to borrow for an education.

Private loans do not have the repayment plan offerings that federal loans do such as income based repayment plans with loan forgiveness. This is why private loans must be carefully considered given their high interest rates and inflexible payment options. LoanMajor’s calculators try to help the student understand how much payments are for all loans options so that you do not take on too much debt.