Comparison shopping can save thousands of dollars for families in search of private student loans, a new analysis by Credible reveals.
When borrowers were prequalified with more than one lender, the average difference in rates on 10-year, fixed loans was 1.7 percentage points. That produced a median savings of $2,769. The median savings on a 10-year variable rate loan was $2,059.
By integrating with lenders and credit bureaus, Credible allows borrowers to request rates they are qualified for from multiple lenders.
Credible also said the numbers suggest private student loans can be an option for those considering federal PLUS loans.
“Rates on federal PLUS loans for students headed to school this fall recently increased to seven percent,” Credible said in a statement. “Factor in a 4.3 percent up-front fee, and the APR on PLUS loans is about eight percent.”
While Credible allows borrowers to request rates both with and without a cosigner, a prospective borrower’s chances improve with one. In 2017, 45 per cent of applicants requesting rates with a cosigner qualified for a loan from at least one lender, and roughly 31.5 per cent prequalified with multiple lenders.
Only 15 per cent of borrowers requesting rates without a cosigner prequalified, with less than 10 per cent prequalifying with more than one.