PNC is one of the larger banks in the United States, and it offers private student loans through its Solution Loan. Existing PNC customers may benefit from this loan the most, as it includes a 0.50% interest rate reduction if you have a checking or savings account with PNC and enroll in automatic payments.
Let’s see how it compares against federal student loans and other private lenders.
Details of PNC’s Solution Loan
The minimum amount you can borrow is $1,000, and the maximum amount you can borrow is $40,000 per year. Your total student loan debt (federal and private loans) can’t exceed $225,000. Fixed APRs on the Solution Loan range from 6.29% to 12.29% and variable APRs range from 5.23% to 11.23%.
You have up to 15 years to repay the loan. You can choose to have payments deferred as long as you’re enrolled at least half time, and payments won’t be due until six months after you graduate. You can also start paying right away or make interest-only payments while in school if you want to reduce how much you pay in interest over the life of the loan. Either of these last two choices will save you money in the long run, but they don’t come with the six-month grace period.
Don’t have the greatest credit, or a lengthy credit history? You can apply with a cosigner, and a cosigner release is available after 48 consecutive on-time monthly payments have been made.
Remember, if you have a PNC checking or savings account, you can receive a 0.50% interest rate deduction by enrolling in automatic payments.
An example payment looks like this: If you borrow $10,000 at a fixed APR of 6.19% on a 15 year term, your monthly payment will be $111.07, and the total cost of your loan will be $19,992.60.
How Does the Solution Loan Compare to Federal Student Loans?
Federal student loans are known for having lower interest rates than private loans, and that holds true in this case. Direct Subsidized and Unsubsidized Loans have a fixed interest rate of 4.29% as of the 2015 – 2016 academic year. While the variable APR for PNC’s Solution Loan begins at 4.58%, you (or your cosigner) will need excellent credit to obtain that low rate. Additionally, variable rates aren’t set in stone. That rate could increase over the next few years, potentially making the loan more expensive.
Federal student loans also come with a host of benefits for borrowers, including: Income-Driven Repayment Plans, deferment forbearance, forgiveness, cancellation and discharge. Private loans don’t come with these guaranteed benefits and PNC makes next to no mention on its site about repayment assistance.
At the very least, the Solution Loan doesn’t include any fees, whereas there’s a 1.068% disbursement fee associated with Direct Subsidized and Unsubsidized Loans as of the 2015 – 2016 academic year.
However, not everyone can fund his or her college education strictly on federal loans, as the amount you can borrow is capped. Do your research to find a private lender willing to offer you rates as close as possible to the rates offered on federal loans.
There are a few eligibility requirements borrowers need to meet to apply for the loan:
- You must be a U.S. citizen or permanent resident
- Borrower needs to be age of majority in the state where they reside, otherwise they need to apply with a cosigner who is at least the age of majority
- Borrower has to be enrolled at least half time in an eligible program in an eligible school
- Borrower must have at least two years of employment, otherwise, the cosigner must
- If you or your cosigner are self-employed, you’ll need to have been in business for two years
PNC takes debt-to-income ratio and credit history into account as well, though it doesn’t specify what debt-to-income ratio or score it looks for.
Application Process and Documents Needed
The application process is quick – you can receive an answer in just a few minutes. When applying with a cosigner, the borrower will complete the application first. There will be a place to enter the cosigner’s contact information. Once complete, a link to the application will be emailed to the cosigner so he or she can fill it out.
Information you should have ready includes:
- Personal information, including Social Security number, address, Driver’s License number, etc.
- The school you’re attending, your major, and expected graduation date
- How much you need to borrow
- Employment information (if applicable)
- Proof of income
If approved and you accept the loan, the funds will be sent directly to the school.
The Fine Print
There’s no application or origination fee associated with the loan. If you’re late making a payment, the late fee will be 5% of your past due amount, or $5.00, whichever is less.
Repayment Assistance Options
Forbearance is available if you can prove an inability to pay back your loans. It’s available for a total of 12 months over the life of your loan, and you can enter into a period of forbearance for up to two months. Keep in mind that interest will continue to accrue while your loans are in forbearance, meaning you’ll end up paying more for the loan if you use this option.
Pros and Cons of the Solution Loan
Pro: In the event the borrower dies, the outstanding balance will be forgiven. Not all private lenders offer this benefit.
Con: The interest rates on the Solution Loan are some of the highest of the private lenders we’ve covered. The 0.50% discount only applies if you have a checking or savings account with PNC, and some borrowers may not want to open additional accounts to receive this benefit.
Pro: In case you have any questions, there’s a live chat option as well as a phone number (1-800-762-1001) you can call to contact an education loan specialist.
Con: There’s not as much emphasis placed on repayment assistance, even though forbearance is offered. It’s wise to look for private lenders who are willing to work with borrowers in case of financial hardship.
Con: The annual $40,000 limit on how much you can borrow is low compared with lenders who allow you to borrow up to the cost of attendance.
For Graduates, Health Professionals, and Law Students
Aside from offering the Solution Loan to undergraduates, PNC also offers graduate and professional loans, a health professions loan, and a bar study loan. These loans all have the same APRs as undergraduate loans.
Private Student Loan Alternatives
Are the interest rates on the Solution Loan too high for your liking? There are other alternatives to choose from as there’s no shortage of private lenders offering student loans.
Sallie Mae’s Smart Option Student Loan offers variable APRs ranging from 4.00% to 9.04%, and fixed APRs ranging from 6.25% to 9.16%. There’s no cap on how much you can borrow, and a Graduated Repayment Plan is offered. You have 10 years to repay the loan, and can choose to defer payments, make interest-only payments, or make monthly payments while attending school.
Citizen’s Bank also offers a private student loan solution. Variable APRs range from 6.14% to 11.19% for a 10-year term and 6.34% to 11.40% for a 15-year term. Fixed APRs range from 6.39% to 11.44% for a 10-year term and 6.59% to 11.65% for a 15-year term. You can borrow up to $90,000, though your combined federal and private student loan debt can’t exceed $120,000. Repayment terms of 5, 10, and 15 years are available.
While your first stop in financing your education should be maximizing federal loans, make sure you shop around for the best deals if you have to resort to private loans. As you can see, lenders offer a variety of interest rates, and it’s important to secure the lowest rates possible. If you shop around within a 30-day period, the credit bureaus will count all inquiries as one, meaning your credit won’t take a huge hit. While you’re at it, you might want to check with your local credit union or the bank you use to see the rates on loans they offer.