Help! Is Anyone Still Giving Out Private Student Loans!?

Reader Michael has some questions about how the credit crunch is affecting private student loans. Is anyone still lending?

In the wake of the Credit Freeze, I’m a student who needs some private loans for my schooling starting in the Spring. I’m an older student with established credit. I’ve seen a lot of student loan organizations close their doors lately and now that I’m in a position to apply, I need to know where to turn…Is there a list of who’s still lending privately and who is “frozen”? Any suggestions?

According to a recent AP article, there is some cause for concern. A survey by the National Association of Independent Colleges shows that students are being forced to drop out — and one in five colleges reported a smaller incoming class than expected, despite the largest crop of 18-year-olds since the Baby Boom.

According to the website, 36 lenders have stopped providing private student loans, says the AP, and the rest have upped their standards. This is actually good news for you — because the article says that the number one barrier to obtaining a loan in this environment is a lack of a credit history or a poor credit history.

John E. Dean, special counsel to the Consumer Bankers Association, which represents for-profit student lenders, told the AP:

“The easiest step… is to bring in a creditworthy co-signer,” he said. “That will make a difference on the availability of loans and the price.”

If your credit history is established, it’s time to shop around for the best deal. provides a list of lenders (in alphabetical order) that you may want to start with.

Before you even consider a private loan, however, you should make sure you read up on how they are different from federal loans. Here’s some information from the Student Borrowers Assistance Project, which is program of the National Consumer Law Center.

Anyone else looking for student loans in this market? Do you have advice for Michael?

(Photo: rmgustaf )


Edit Your Comment

  1. Ron Draper says:

    Sallie Mae isn’t the best option out there, but it’s the only one I can think of. They did peg their rate to LIBOR instead of Prime, so they’re one of the better places you can go with, and they take just about anyone. Make sure you have a cosigner because without one, you can go up to LIBOR + %6. Ouch.

  2. Justinh6 says:

    What a shame.

    Don’t borrow a dime from Sallie Mae, they are the modern day gestapo.

    I moved all mine over to Citibank, they have been very fair with me.

    The private student loan interest rates are insane, mine is 9 percent, but my federal is 2.5.

    • MadonnaAthos says:

      Really? My Citiassist account is currently 4.75% (variable). The loans were taken out in 2003 & 2004, but are variable at prime.

    • ConroyCotta says:

      @Justinh6: I have a Sallie Mae loan and they’re fine…. of course, I pay my biil every month…early…

      • wikkit says:


        My SallieMae experience has been miserable, and I do pay my bill on time…early…as you prescribe. I too switched to Citibank.

        In my experience, SallieMae is just fine, as long as you never have to interact with them. Once you’ve asked them to do something (consolidation, change of address, et cetera), you realize how worthless they are.

        • ganzhimself says:


          I have never had a problem, and they were able to get me on a “graduated” payment system so I can pay a manageable amount for the first few years until I get a good job or whatever… Yeah, it is going to cost me more over time, but right now I’m happy with the choice. I’m hoping to end up paying it all back early, especially because I just started a very good job. Keeping my fingers crossed…

    • jeknee says:

      @Justinh6: I’ve been paying to Sallie Mae for over a decade now. Never had a single issue, and love the low fixed interest rate. So much easier to deal with than the state loan I took out. Of course, I too pay my bill early (automatically, online) and pay extra when I can.

    • gqcarrick says:

      @Justinh6: I had no problems with Sallie Mae, I paid my loan off early and they never bothered me once even when I was unemployed.

  3. sir_eccles says:

    What credit freeze?

    I shredded 3 credit card offers this morning.

  4. Suttin says:

    You have a low interest rate compared to mine, try 13% on for size.

  5. FightOnTrojans says:

    I cannot stress this enough: Go see your financial aid counselors at your school. They are best equipped to help you with this. If you are a grad student, you have no need for a private loan. You could get up to $20,500 in Stafford Loans, and then a Graduate PLUS Loan for the balance (per year), if necessary. Older undergrads are a bit trickier. Depending on your dependency status and units completed, you could get up to $12,500 in Stafford Loans per year. Besides, the interest rate you get on a Stafford Loan (and Grad PLUS) will most likely be lower than what you can get on a private loan. Good luck!

    • wikkit says:


      That’s all well and good as long as your school isn’t in bed with the lenders.

      • FightOnTrojans says:

        @wikkit: Even if your school is “in bed” with a lender, they cannot force you to choose one of their preferred lenders. You can choose whoever you want. I’ve heard that some schools do this, and they should be reported if your school does this. I think the Dept. of Education would be interested in this as it was a hot-button issue about 1-2 years ago.

    • sponica says:

      @FightOnTrojans: Grad students do need private loans when they max out their federal loans. Try living in NYC on what the federal government thinks you can live on….I make do with the direct loans, but I have used private loans during the summer when I knew I wasn’t going to get anything from the govt

    • Copernicus42 says:

      @FightOnTrojans: Actually when my girlfriend was looking for a place to get a good loan she went to the financial aid office and they turned her away.. They said they couldn’t even recommend a place to look because it would be considered showing preference to one bank over another.

    • OPRAH says:


      Everybody seems to point Undergrads towards federal loans but they cap every year at $4500. I go to a private college and my tuition is apparently $60,000. I have about 60% taken care of in scholarships and grants. Yet, there is a $20,000 left minus the federal loan. Where the hell am I supposed to get the other $20,000 if no one’s willing to lend to me?

  6. Expanding Buttocks says:

    Yes! I just got approved for one with a Citi Student Assist loan (Citibank). I’m not sure if they are throwing money out there- but I got a small one for $1000 this past Thursday. Maybe its worth a shot for you?

    Google: CitiAssist Undergraduate Loan

    • pippenz says:

      @Expanding Buttocks:

      I received a CitiAssist Loan while i was in school. I am almost done paying it back (yay). Make sure you pay a few days ahead of time, as their collections doesn’t always notice if you pay on the due date online.


    • Jubilance22 says:

      @Expanding Buttocks: CitiAssist was a godsend to me when I was a grad student. Citibank made my entire student loan experience a good one, which is why I consolidated everything except the damn Sallie Mae loan with them.

  7. smint says:

    I don’t get what the big deal is with Sallie Mae. I have two loans out from them, one at 4.5 percent and my most recent at 6.5 percent. Maybe they’re the “gestapo” if you’re a moron and don’t pay on time or something.

    • wikkit says:


      It’s nice to hear that people whose experiences don’t mirror your own are morons. Maybe you’ll have better luck with them, but I’ve found their customer service to be my own personal hell-on-earth in several different circumstances.

    • Anonymous says:

      This is akin to the wild west of consumer finance since so many consumers (regardless of their financial literacy/background) have very little experience navigating. For-profit lenders often take advantage of this and rates/fees will vary wildly. It pays to shop around.

      Rates are typically based on the type of student loan you get and the credit score of the borrower (or co-borrower) and sometimes even the “quality” of school being attended (depending on the lender). Also watch out for Origination Fees and other fees which make your effective rate (APR calculation) much higher than the published rate you thought you were getting.

      If you get a federal government backed student loan (eg. a Stafford loan) the rates will be low and fixed but only go so far. As mentioned earlier, if you are a graduate student you can use the PLUS loan (which is fixed somewhere around 8% with some origination fees). PLUS loans are not necessarily a great deal (it depends on your rate outlook)…but it is a fixed term rate which is more comfortable for many people.

      If you get a private student loan (commonly used to cover the “gap” that remains after maxing out the federal Stafford loans) then the rates and origination fees will vary considerably depending on the lender you choose. Shop carefully and know what you are getting into. Be sure to check your local not-for-profit credit union (as I stated in an earlier post).

      In this current environment it is very common for good-to-excellent credit quality borrowers to see rates in the double digits and “origination” fees averaging 3-4%.

      note: nearly all private student loans are variable rate loans. So, the “rate” is really an index (like LIBOR or PRIME) plus/minus a spread. See this comparison (published today) of some of the big private student lenders:

      However, before you go applying for the published “lowest range” options you need to understand that the vast majority of people will fall into the higher published range — the range isn’t bell curved. Tricky aren’t they. Note the fees too.

      Also, interesting note that Sallie Mae has some of the highest rates of any lender on the list given their cost of funds.

      Again, consider checking with your local credit union.

    • NikkiSweet says:

      @smint: Hmm… how about never being late on a payment, and paying more than the minimum, only to check your credit report and find out that they are reporting your student loans 4 times (same loan) and 3 of them are showing as being in default.

      They claim that they’re only reporting one, and it’s fine, but according to Experian/Transunion, they’re reporting all 4, with different account numbers that don’t come up in Sallie Mae’s system.

      I’m going to go ahead and say that it’s safe to assume they’re “gestapo.”

  8. chauncy that billups says:

    My rate was 7.5%, so I transferred it to a chase card with a fixed-for-life 3.9% APR.

  9. Eyebrows McGee (now with double the baby!) says:

    I’m with Citi, hubby’s with Sallie, DEFINITELY go with Citi if there’s a choice between the two. And I do hear Citi’s still lending.

    Also, if you can, find work as a nanny/manny. Live-out in small markets pays $10/hour and kids SLEEP. (Or have homework to do themselves.) You can get a lot of studying done while often working fairly flexible hours for fairly good money. If you can get a live-in position flexible enough for you to attend school, you’re also saving on room and board. I avoided some loans by nannying in law school.

    I hear overnight parking attendant is another good going-to-school job to help avoid loans, since you can study basically uninterrupted, but it pays less and requires you to be up all night.

  10. FortyMegaFonzies says:

    I can’t get a Stafford loan from my school due to being stuck in some indeterminate state which is neither an undergraduate or a graduate — having a BS, but taking undergrad classes for admission to a grad program. Anyway, Chase approved me for several thousand dollars at prime + 2% interest without a cosigner …OP might want to try them if he or she has good credit.

    ps Sallie Mae really does suck …I have loans (in good standing) with them and they have “forgotten” to process my in-school deferrment requests more than once, always getting an extra payment or two out of me before I call them to sort it out. One time they also decided to ask me some weird security questions that I didn’t know the answer to (you only get one try) so I lost online access to my account until I was able to stay on the phone for half an hour with them. Are they worried an imposter is going to log on and pay off my loans?

  11. Lars says:

    How about applying some of the mana from heaven at low interest (aka bailout funds) to struggling students instead of merging banks? Investing in the people and commons might be a better approach to stimulating economic recovery than helping Citi and BoA acquire a few more struggling banks. Just a thought.

  12. GuinevereRucker says:

    I heard somewhere that the price of houses are grossly inflated over what they should be because people have access to huge amounts of credit. If you can spend money you don’t have yet, you are willing to pay thousands more.

    I wonder if this concept is the same for students loans? Do you think the price of college is so expensive because students just get loans? Just a thought.

    My wife and I have no college debt but both have degrees. I can’t tell you how freeing this is – many of our friends have debt up to their ears and have to spend the first 10 years of work paying off studnet loans (on top of a mortgage/rent and car payments).

    I guess I’ve come to the conclusion that it’s bad to spend money you don’t have. Even if you think you’ll get a great job that pays enough after college, that’s still a lot of debt. And what if you can’t get a job in your field or the job you get pays too little to pay off loans?

    Check out cheaper schools maybe. I went to state school and didn’t like it much, but I didn’t have to take out loans. Is that fancy degree *really* worth $100,000 in loans? You might regret it later. Truthfully, a good education is what YOU put into it as much as what school you’re at.

    • sponica says:

      @GuinevereRucker: Part of the expense is that dorms turned from barracks to palaces. I had my own private bathroom for 3 years, sharing with only my roommate or roommates in the case of my apt senior year. And quite honestly, my nice fancy education from a pretty decent Jesuit college cost me FAR FAR LESS than my public school master’s degree. less than 40 for a BS at a college whose tuition was about 35 to 40. Whereas I’ve been taking out 20 a year for 3 years of grad school. Private schools can give more grant aid than public schools can.

    • dumblonde says:

      @GuinevereRucker: Actually it’s because colleges spend a lot on students. Tuition and fees alone cover a fraction of the total amount the college spends on the student. That’s why colleges need donations and endowments. Tuition alone will never cover all costs in a million years. Like sponica says, some colleges have enough money to basically just give it away. I was able to go to an Ivy League school and graduate practically debt free thanks to their financial aid policies.

    • Etoiles says:

      @GuinevereRucker: I went to state school, did like it, and STILL had to take out a ton of loans. Sometimes life’s crappy that way.

      (And I was working 30h/week, my junior and senior years, and 20h/week my freshman and sophomore years. And full time + every summer and vacation. So it’s not like I was sitting on my ass taking debt for beer money.)

      • oyvader says:

        I lucked out, too. I didn’t have to take out loans until my last year of grad school, and we’re working aggressively towards paying them off. Sallie’s the first to go, and she should be out of my hair in under six months.

  13. Clobberella says:

    I got $10,000 from Wells Fargo just this past summer. Looks like they’re still lending. I went with the “Education Connection Loan” because they pay you a lump sum, but they also have a more traditional loan available. The APR is, of course, variable, but I couldn’t find a private loan anywhere that wasn’t.

    Wells Fargo Student Loans

  14. mzs says:

    I concur with all the people saying SallieMae customer service isn’t.

  15. rickhamilton620 says:

    Yep, I’m looking for one too. Need a pretty small amount though about 3,000. But, I would really prefer one w/out a cosigner. I’m employed, but being only 18, don’t have any credit history besides my federal loans that I had used during the summer for classes at a community college, and the ones I’m using now.


    • Anonymous says:


      In today’s credit environment you will find it hard to find a non-government student loan that doesn’t require a co-signer and is also at a fair rate and term. Not impossible to find a loan, but if you do find you will pay a premium.

    • ganzhimself says:


      In my experience, I’d say finding something that doesn’t require a cosigner to be slim to none in this credit market. I went through The Educational Resource Institute (TERI) to get a small loan w/o a cosigner ($4,000) 4 years ago. Unfortunately the servicer of the loans American Educational Service (AES) turned out to be pretty shady… By shady I mean, they sometimes don’t send me my bills in the mail, and they cut off my online account access so I had a very hard time getting my bills paid ontime. I have it worked out now, so I guess it’s ok…

      Before I got that particular private loan, I couldn’t get private loans with out a cosigner, even with a very good credit score and two credit cards that I kept very small balances on and paid them on time every month. This was back when the credit markets were very loose, now it’s gotta be much harder.

      • sarahandthecity says:

        @ganzhimself: i had a couple problems with paying online too, but they never charged me interest or late payment fees when the payments didnt make it through, for which i give them a solid.

    • sponica says:

      @rickhamilton620: I doubt it’s possible in these days, and I wouldn’t even recommend it. A cosigner (in the bad old days) would allow you a lower interest rate (bc they theorize they can get grandma’s money if you default). I couldn’t get a private loan the first yr I applied, as I had no credit history. Needed a cosigner for the first one, and after that I had a credit card long enough that I didn’t need one for my following private loans.

  16. KeeganGwar says:

    yikes! I’m quite glad I graduated in August before things got this bad. I was taking out $35k in private student loans (Citibank) and some amount ($5k or more) in Federal loans each year since 2004. Now I get to start paying those back o_O. At least my RIT degree helped me land my dream job :)

    I know a few friends from high school that also recently graduated and can’t start grad school because they can’t get the loans they need. It’s a really unfortunate ripple effect with people not able to get the education they need to start their careers.

  17. Tarandon says:

    My Girlfriend has applied to Teachers College in Buffalo 3 years in a row. This year however, she’s already been pre accepted to 2 of them, with acceptance pending elsewhere. I wondered if it was because banks weren’t lending to US Students, and Canadian applicants were guaranteed income.

    Any thoughts?

    • Anonymous says:

      @Tarandon: Well, I would be more inclined to think that Canadian students are guaranteed a SCHOLARSHIP of some sort directly from the school before I would think that they are guaranteed a loan or income from any US bank. Who knows what the reason is that the school might prefer Canadian students but I am really sick of a lot of schools in the northern US giving scholarship preference to Canadians before US residents.

  18. sarahandthecity says:

    mine was through TERI and they gave me a pretty fair rate of 8% and recently dropped it to 6% for no apparent reason (but who’s complaining!) has a pretty solid list of lenders.

  19. Pious_Augustus says:

    Don’t go too college unless your going into Healthcare or Education please. As a former debt collector and someone who saw this coming ten years ago going to college is a waste of money.

    Most employers don’t care if you have college or not and often college makes you over qualified and I know plenty of people here who have there masters and make the same amount as I do.

    If the employer doesn’t want to hire you, they are going to skip you regardless and it will just give them an excuse to do something they’d do anyways and hire someone out of country.

    • KeeganGwar says:


      “often college makes you over qualified” –yes, for menial labour like call center jobs, valet parking, etc…

      For IT jobs and many others, most employers list a BS in a related field (since IT degrees are still fairly recent and not that widespread, especially among state schools) as a requirement for consideration. Without my BS in IT I would never have gotten any interviews (and I had two companies, including the one I am at now, tell me this).

    • Kajj says:

      @Pious_Augustus: That is terrible, terrible advice for anyone who aspires to do anything beyond hourly-wage work. Nearly every white-collar job requires a BA or similar.

    • Rectilinear Propagation says:

      @Pious_Augustus: Are you serious?!?!

      Most employers don’t care if you have college

      Well, if you want to work in food service or retail maybe but even then you might need some form of higher education if you want to move up into management. If they don’t require it to get the job they may want you to take management classes as a requirement of having that position.

  20. Brazell says:

    Yes, many are. Call your school’s financial aid office.

  21. Silversmok3 says:

    Take this advice:Go to Community School,get straight A’s (or close to ) , and use a combination of government loans and academic scholarships to fund your education.

    Otherwise youll owe twice your first years salary in non-dischargable debt at 10% or greater interest for 20+ years….

  22. xthexlanternx says:

    I’m really nervous about this. I’m applying to law school now and I’ll need loans to pay for it, so we’re talking at least $30,000 a year, probably more than that. I had no problem with any of my loans for undergrad, but I am an older student with no real credit history because I was in the military and then lived with my parents while I attended undergrad. My parents have good credit and would co-sign, but I doubt they would have collateral for $120,000 worth of loans as we are in no way rich.

  23. Anonymous says:

    Borrow Federal First.

    As an older student (“independent student” in the jargon used by financial aid administrators), Michael is eligible for $9,500 to $12,500 in Stafford loans per year, depending on year in school, if he is an undergraduate student, and $20,500 if he’s a graduate student. Graduate students can also borrow up to the full cost of attendance through the Grad PLUS loan program.

    Before resorting to private student loans, exhaust your federal student aid eligibility first. The federal loans are cheaper, more available and have better repayment terms than the private student loans. The federal loans also have fixed interest rates, while private student loans have variable interest rates that are much more expensive for most borrowers.

    If you must apply for a private student loan, apply with a creditworthy cosigner. Lenders use the higher of the two credit scores to determine eligibility and the interest rates and fees. So not only will this increase your chances of obtaining a private student loan, but it will usually result in a lower cost loan.

    Mark Kantrowitz

  24. jackdangers says:

    I got a student loan through TERI ( and they are pretty great. I have less than stellar credit, but with a co-signer I received a more than fair interest rate. Plus, they have great customer service, and an online application. Definitely worth a check.

  25. Taydin says:

    I got my private student loans through Chase Bank and then they ended up selling all but one of them to TERI. I am now at the end of my grace period and looking to get them consolidated through Wells Fargo. If you think the list is short to find a private student loan…try finding a bank that will consolidate it…I only found two banks that will do it, Chase and Wells Fargo. Certainly think ahead, past getting the loans to who is going to be able to consolidate it for you when you are ready to start paying.

  26. colorisnteverything says:

    The key to people who are worried about grad school is to establish a credit history throughout your undergraduate years. I have been a cardholder since I was 18 and had a “learner” card since I was 16. I always pay my balance on time. I never buy more than I can pay off. Period. If you are doing this, you will be building credit.

    Also, taking out a small private loan with a co-signer will build your credit. I have a $5,000.00 loan that I am actually paying principle on. My father encouraged it to give me “flow” with more money for expenses and because of his cosigning, we got the best rate imaginable. It’s now down around $4,300.00 3 years later and we will probably pay it off when I graduate in FULL because there will be money left over from my school budget.

    I have “excellent” credit (score-wise) and will now be able to get excellent rates on private loans for grad school if I need them. Build a credit history as an undergrad.

    And parents, I beg you, budget for your children. The only reason I am coming out of my undergrad with less than $15,000 of debt is because my parents have paid for everything with the exception of living expenses. It would be far less had I not decided to spend a year in England, but I thought the experience was worth it.

  27. Anonymous says:

    I too have loans through Sallie Mae. I have a consolidated federal stafford loan at 3.75%, not bad. But I have a private one that is 11%, down from 15% (consolidated), but was at 18% at one point!! The loan’s principal has doubled in 5 years and my payments are $510/mo….INSANE! I agree that students who were ‘raped’ by greedy lenders should be bailed out and there should be some sort of regulation as to what can be charged on student loans!!

  28. MandaRenee says:

    I too have been worried about student loans. I am in my second year of law school and would be devastated if I could not find funding for my final year. I go to a private school where tuition is 30k a year. I realize state school’s are cheaper, but you’ve got to go where you get accepted.
    I have been using SallieMae, but really had a problem obtaining this year’s loans since I’ve never had a “real job” and have no cosigner.
    I won’t know until next spring if I will get the loans I need.
    As a first generation college grad I sometimes feel like the government doesn’t exactly make it easy for people who want to improve their lives.

  29. Anonymous says:

    I want to warn people about the school you choose. I’ve spent 6 years just trying to get my Bachelors because of the school I picked. My gpa was always above 3.7 and it just so happened that the school was too busy making money to educate the students. I’m now stuck with an online school that does the same thing. Lucky me!

    As to everyone saying school is a waste of time or picking education or nursing those are some pretty crappy comments. School is a waste of time for those who are going because they have nothing better to do or have mommy’s and daddy’s money to spend. Nursing and education will not get you anywhere if you don’t enjoy doing it.