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SunTrust Private Student Loan Review

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SunTrust is a decent option for borrowers with excellent credit who’ve maxed out their federal aid and need more money to cover their educational expenses. The bank offers multiple opportunities to shave down your interest rate, including up to a 0.5% reduction if you set your payments to come out of your bank account automatically.

But like many private student loan options, SunTrust’s loans don’t stack up to federal programs, which offer better borrower protections — such as income-driven repayment — that could make payments as low as $0 per month. To see if you’re eligible for federal aid like grants and loans, fill out the Free Application for Federal Student Aid, or FAFSA.

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At a glance

  • Fixed rates: 4.75% to 11.50% APR. Variable rates: 3.37% to 10.43% APR
  • Available loan terms: 7, 10 or 15 years
  • Eligible loan balances: $1,001 to $65,000

*Rates updated Feb. 1, 2018. 

Borrowers can take loans from $1,001 (with several state-based exceptions) to $65,000 per year, up to an overall maximum of $150,000. Those going to graduate or business school can borrow up to $95,000 per year and $175,000 overall.

» COMPARE: Private student loans

Do you qualify?

Private student loan lenders typically look for credit scores that are good or excellent. You’ll generally need a score of at least in the mid-600s to qualify. SunTrust declined to disclose its minimum credit score requirements or the average score of its private student loan borrowers.

In addition to your credit score, SunTrust also takes into account your existing debts, payment history, number of years in school and several other factors. You need an income to qualify, unless you’re applying for its graduate business school loan. SunTrust student loans are not available to permanent residents of Iowa or Wisconsin.

If you don’t meet the minimum qualifications, you can apply with a co-signer. Co-signers can be released from the loan when you make the first 36 consecutive principal and interest payments on time.

Once you submit your application, you’ll know almost instantly if you’ve been approved. Then you can choose from different repayment options and terms.

Repayment options

Like most private student loan companies, SunTrust offers borrowers several repayment options:

  • Immediate: Make full payments — both interest and principal — starting 30 to 60 days after the final loan disbursement. This option will save you the most in interest.
  • Interest-only: Paying just the interest will lower your monthly payment, but it won’t reduce your principal balance, or the amount you originally borrowed.
  • Partial interest: If your loan is $5,000 or more, you can make payments of $25 per month. Any unpaid interest will be capitalized, or added to your principal balance, when you start making your regular monthly payments. That may increase your monthly payment amounts and will cost you more in the long run.
  • Full deferment: You can choose to defer payments while you’re enrolled in school at least half time, and during the six-month grace period after you leave school or drop below half-time status. Any unpaid interest will be capitalized.

Once you start making regular payments, your minimum monthly payment will be $50 regardless of how much you took out or how long your loan term is, though most payments are several hundred dollars per month.

If you have trouble making payments, you can make interest-only payments for 12 and/or 24 months. Forbearance also is an option. That means you’d stop making payments for three months at a time, for up to 12 months over the life of your loan. Interest still would accrue on your loan and be capitalized afterward.

SunTrust has a feature called In-School Refinance Option, which lets you refinance your existing student debt and roll it into the loan you’re applying for. If your credit has improved dramatically since you took out your first loan, it could be a good opportunity to get a lower rate. However, refinancing probably won’t be a good idea until after you graduate, when it’s more likely that you’ll have a steady income and good credit.

Where SunTrust shines

Opportunities to lower your interest rate: SunTrust offers borrowers multiple chances to lower their interest rate, including:

  • A 0.25% interest rate reduction for automatic loan payment withdrawal from a bank account
  • An additional 0.25% interest rate reduction when payments are made automatically from a SunTrust bank account
  • A 0.25% interest rate reduction with 36 consecutive on-time payments on a Union Federal Private Student Loan

Graduation perk: Upon graduation, borrowers can request a 1% principal reduction on their loan. So if you take out a $10,000 loan, SunTrust will take $100 off the principal.

Where SunTrust falls short

Interest rates are higher than federal rates: Compared with federal rates, which are currently 4.45% on direct loans for undergraduates, SunTrust’s fixed rates can’t compete. In general, it’s best to go for fixed over variable rates.

Fewer borrower protections than federal loans: SunTrust, like most private lenders, doesn’t offer the same borrower protections as the federal government. That means you won’t have the safety net of income-driven repayment or forgiveness programs to prevent you from defaulting if you can’t keep up with monthly payments.

Loan details

Fees: No application, origination or prepayment fees.

Loan servicing: American Education Services.

Grace period: Six months. Not available to borrowers who choose the immediate repayment option.

Deferment and forbearance: Borrowers experiencing a financial hardship may receive forbearance for up to 12 months, in three-month increments. Available upon request.

Next steps

It’s a good idea to compare multiple private student loan options before choosing one. If you want to apply for a loan with SunTrust, you can start on its website. You’ll need the following when you apply:

  • Proof of income
  • Proof of citizenship
  • Identity verification

Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @devondelfino.

Updated Aug. 8, 2017.