Private student loans are a way to bridge the gap between federal financial aid and your total college cost. PNC Financial Services offers student loans for both undergraduate and graduate students, with $5.7 billion in student loans outstanding, according to public March 2016 filings with the Securities and Exchange Commission. The company also offers loans to cover bar study and medical residency expenses, and loans for health professional students.
But before you consider a private loan, cover your bases by filling out the Free Application for Federal Student Aid. The FAFSA is required for you to be eligible for many grants, scholarships, work-study opportunities and federal student loans.
PNC student loans at a glance
- Fixed: 6.21% to 12.99% APR. Variable: 4.39% to 11.48% APR.
- 15-year loan term.
- Loan modification program for struggling borrowers.
Undergraduate students can borrow up to $40,000 a year, and graduate students can borrow up to $65,000 a year. You can choose between fixed and variable rates; variable rates are subject to change every three months as market conditions fluctuate.
Like many private student loan lenders, PNC offers three repayment options for borrowers while they’re in school: immediate repayment, interest-only payments or in-school deferment.
- Immediate repayment: You’ll save the most money in interest with this option, but you’ll have to start making payments while you’re in school.
- Interest-only payments: This middle-of-the-road option lets you chip away at the interest as it accrues but lets you postpone paying back your principal (the amount you originally borrowed) until after you graduate.
- In-school deferment: This option lets you postpone your full loan payments while you’re in school and for the first six months after you leave school. But the interest will continue to accrue, which means you’ll end up paying more in the long run.
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Do you qualify?
You need two years of credit history and continuous income to qualify. You also need a good credit score, but PNC would not disclose its minimum credit score requirements. Finally, PNC wants to see that you earn enough to cover your student loan payments on top of other debts you owe.
If you don’t meet these qualifications — and many undergraduate students don’t — you can apply with a co-signer. Ninety-two percent of undergraduate borrowers and 50% of graduate student borrowers have co-signers, says Tom Lustig, president of education lending at PNC. Co-signers can be released from responsibility for the loan after the borrower makes on-time payments for 48 consecutive months.
Where PNC student loans shine
Several options for struggling borrowers
PNC offers more options for struggling borrowers than some other lenders, including an extended grace period, short-term forbearance or a year-long loan modification program.
- Extended grace period: All borrowers who defer their payments during school get a six-month grace period after they leave school before they begin repayment. But if you need extra time beyond that to secure a job, you can request to postpone repayment for an additional six months, Lustig says.
- Forbearance: If you’re facing a short-term hardship, like a job loss or medical issue, you can request to postpone your payments in two-month increments for up to 12 months throughout the life of your loan or up to six months if you take advantage of the extended grace period.
- Loan modification program: If you can’t afford your monthly payments, you can apply for PNC’s loan modification program, which will lower your monthly payment by about 40% for one year if you’re approved. To qualify, you need to prove that your income minus your expenses is less than your monthly loan payment, Lustig says. After the year is up, your payments will increase gradually until they reach the original amount.
Larger interest rate deduction for automatic payments
PNC gives borrowers who opt to have their loan payments automatically taken out of their bank accounts a 0.50% interest rate deduction. Most private lenders offer a 0.25% interest rate deduction for borrowers who set up automatic payments.
Where PNC student loans fall short
Potentially higher interest rates than federal student loans
The average interest rate for all PNC student loans, including loans to undergraduate and graduate students, is 6.89%, Lustig says. To compare, federal student loan interest rates for direct unsubsidized loans are 3.76% for undergraduates and 5.31% for graduate students during the 2016-17 school year, plus a 1.07% origination fee. PNC does not charge origination fees.
It doesn’t service its own loans
A third-party company called American Education Services handles payment processing and loan servicing for PNC student loans. That means you’ll generally contact AES with any questions you have about your payments, but you can also still ask PNC questions about your loan, Lustig says.
Fewer protections than federal student loans
Although it offers several flexible repayment options for struggling borrowers, PNC student loans lack flexible repayment options for other borrowers. With federal student loans, most anyone — regardless of their financial situation — can make payments on an income-driven repayment plan, for example.
Teddy Nykiel is a staff writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @teddynykiel.