Private student loans continuing to get more expensive, looking for ‘best of the best’ borrowers

LendEDU has a snapshot of how the private student loan industry has changed over the past three years.

“In 2016, the average interest rate on a private student loan was 8%,” said Mike Brown with LendEDU. “Compare that to now in 2019, when the average interest rate on a student loan is 10.63%.”

Nearly 200,000 private student loan applicants have gone through LendEDU since 2016.

“Variable interest rates in 2016, 2017 and 2018, remained lower than fixed interest rates for private student loans,” said Brown. “This should be a very actionable piece of advice for consumers. If they’re ever in the market for private student loans, they should probably look for a variable rate before a fixed interest rate.”

There is risk with a variable rate, though, if rates turn around and spike in future years. With that said, lenders are being very selective with their student loan portfolios.

“The average approved FICO credit score for a private student loan applicant was a 737,” said Brown. “The average approved income for a private student loan applicant was $72,947.”

Private student loan lenders are looking for the best of the best when it comes to borrowers and so in most cases, that would mean a co-signer on a loan if private money is used coming straight out of high school, because such a student wouldn’t have a long enough borrowing history for the lender to look at.