There are some obvious things to look for when shopping for a private student loan. For example, you want a lender that offers relatively low interest rates and the ability to defer repayment while you're still in school.
On the other hand, there are some student loan perks offered by lenders that aren't quite so obvious to add to your wish list. As one example, did you know that some lenders will reduce your principal balance after you get your degree? Or, did you know that some will allow you to postpone repayment without penalty if you fall on tough times?
With that in mind, here are the details about these and a few more of the best private student loan perks to look for when shopping for a lender.
1. No origination or prepayment fees
Some student lenders, including the U.S. Department of Education, charge borrowers an origination fee on new student loans. An origination fee (known as a “loan fee” with federal student loans) is a charge that a borrower pays a lender to compensate for the costs associated with underwriting and processing the loan application.
Many private lenders don't charge any origination fees at all, which can translate to big cost savings over your college career. On a similar note, look for private lenders that don't charge a prepayment penalty either. Some lenders don't even charge late fees.
2. Forbearance options
When it comes to federal student loans, there are numerous ways you can postpone your loan payments in tough financial times. In addition to qualifying for a forbearance, federal student loans might even qualify for a deferment, under which the government will pay your interest on any subsidized loans you have.
Some private lenders (but not many) have started to include forbearance programs for borrowers. Generally, if a private lender offers a forbearance program, it provides a specific maximum amount of time payments can be deferred -- 12 months seems to be common. Even so, a forbearance option can be a valuable tool if you ever fall on financial hardship, so it's smart to look for lenders that offer it.
3. Graduation rewards
This is a somewhat rare benefit, but there are a couple of private lenders that offer a “graduation reward,” or a reduction in your principal balance upon graduation. This can take the form of a set dollar amount, or a percentage of your loan principal.
The percentage method can be especially valuable. If you've accumulated $50,000 of private student loans and your lender offers a 2% reduction upon graduation, this translates into $1,000 towards your loan balance.
4. Soft credit inquiry
This is a common feature of lenders offering student loan refinancing, but it isn't very common when applying for new student loans. Even so, there are a few private student loan companies that allow new borrowers (and their cosigners, if applicable) to check their interest rates and loan term offers without any affect to their credit score.
5. Interest rate discounts
A 0.25% interest rate reduction has become the industry standard if you agree to have your payments made automatically from your bank account. Most lenders refer to this as the autopay discount, or some variation.
However, some private student lenders, especially those that are full-service banks, also offer discounts for borrowers who have a banking relationship. For example, a bank may offer a 0.25% interest rate reduction for autopay and an additional 0.25% discount for borrowers who maintain a checking account with the bank.
No lender offers the best of all of these
To be perfectly clear, not all student lenders offer every single one of these perks, and few offer the best version of more than one or two. The point is that while these are some of the best student loan perks you can find, it's important to decide which are the most important to you when shopping for a private student loan.