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Private Student Loans - Putting It All Together

For the Savvy Borrower

A deeper understanding of your lender’s loan policies will result in better management of your private loan.

For example, because private loans are credit based, most lenders require a creditworthy cosigner. But even if they don’t, you get a better rate when you have one. Essentially, having a cosigner allows you to enjoy their good credit, resulting in a lower interest rate for you – saving you money.

In addition, lenders apply advanced loan payments differently for different loan products. For some loan products, payments are initially only applied to the interest on the loan and are not applied to the principal until the interest is paid off. Ask your lender to give you the policy on how they apply pre-payments.

View real, trustworthy loan products based on your financial information, not “as low as” advertisements, on HESC Student Loan Marketplace.

Private loans can be complex so you must be a smart loan shopper. HESC Student Loan Marketplace is the place to begin.

At HESCStudentLoanMarketplace.org, you can learn about and compare real private loan terms, as well as the state-sponsored New York Higher Education Loan Program (NYHELPs).

Which loan is best for you?

While the APR is a good measurement, it may not always be the best indicator of a loan that best fits your particular circumstances. You also need to consider other factors, like whether the fee allows you to have all the money you need at the time you take out the loan. Through the financial literacy coursework that is part of HESC Marketplace, you’ll learn all you can about managing credit and debt, preparing you to make wise borrowing decisions.

How Loan Terms Affect Borrowing Costs

A comparison of loans will help you see how factors such as interest rate and fee amounts affect how much your loan actually ends up costing you.

Let’s say you’re a freshman and you want to take a $10,000 loan with interest deferred until after you graduate, a total of 54 months, including a six-month after graduation grace period. The sample comparison below shows how different interest rates affect your overall cost. As with most private loans, the loan fees are added to the principal amount and the loan term is 10 years.

Loan Comparisons
	Lender A	Lender B
	Loan amount: $10,000.00	Loan amount: $10,000.00
Interest Rate	10%	12%
Total Fees (5 % of loan)	$ 500.00	$ 500.00
Loan Funds Disbursed	$10,000.00	$10,000.00
Total Amount Financed	$10,500.00	$10,500.00
Total Capitalized Interest	$ 4,725.00	$ 5,670.00
Total Repayment Amount	$15,225.00	$16,170.00
Monthly Payment	$ 201.20	$ 231.00
Additional Interest Cost (after repayment begins)	$ 8,918.94	$11,669.10
Total Cost of Loan	$24,143.94	$27,839.10

This sample comparison of Lenders C and D shows how different fee amounts affect your overall cost. Again, the loan fees are added to the principal amount and the loan term is 10 years.

Loan Comparisons
	Lender C	Lender D
	Loan amount: $10,000.00	Loan amount: $10,000.00
Interest Rate	10%	10%
Total Fees (5 % & 3% of loan)	$ 500.00	$ 300.00
Loan Funds Disbursed	$10,000.00	$10,000.00
Total Amount Financed	$10,500.00	$10,300.00
Total Capitalized Interest	$ 4,725.00	$ 4,635.00
Total Repayment Amount	$15,225.00	$14,935.00
Monthly Payment	$ 201.20	$ 197.37
Additional Interest Cost (after repayment begins)	$ 8,918.94	$ 8,749.06
Total Cost of Loan	$24,143.94	$23,684.06

Below are sample NYHELPs loans. Unlike most private loans, NYHELPs loans deduct fees from the loan amount. The interest rate and fee amount varies, depending on the repayment plan selected.

NYHELPs Loan Comparisons
SAMPLE NYHELPs LOAN 1 – With Full Deferment
Interest Rate	8.75%
Total Fees (7 % of loan)	$ 700.00
Loan Funds Disbursed	$ 9,300.00
Total Amount Financed	$10,000.00
Total Capitalized Interest	$ 3,937.50
Total Repayment Amount	$13,937.50
Additional Interest Cost (after repayment begins)	$ 7,023.40
Total Cost of Loan	$20,960.90
Monthly Payment after 54 months	$ 174.67
SAMPLE NYHELPs LOAN 2 – With Full Deferment
Interest Rate	8.25%
Total Fees (7 % of loan)	$ 600.00
Loan Funds Disbursed	$ 9,400.00
Total Amount Financed	$10,000.00
Total Capitalized Interest	$ 0
Total Repayment Amount	$13,712.50
Additional Interest Cost (after repayment begins)	$ 6,469.99
Total Cost of Loan	$20,182.49
Interest-only Payment while in school	$ 68.75
Monthly Payment after 54 months	$ 168.19
SAMPLE NYHELPs LOAN 3 – Making Principal and Interest Payments While in School
Interest Rate	7.55%
Total Fees (7 % of loan)	$ 500.00
Loan Funds Disbursed	$ 9,500.00
Total Amount Financed	$10,000.00
Total Capitalized Interest	$ 0
Total Repayment Amount	$10,000.00
Additional Interest Cost (after repayment begins)	$ 4,275.55
Total Cost of Loan	$14,275.55
Monthly Payment after 54 months	$ 118.96