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Updated on Thursday, September 3, 2015
Is the Federal financial aid you received, along with scholarships and grants, not enough to cover the cost of your tuition? For some students it’s not, and private student loans can help bridge the gap.
Wells Fargo has undergraduate student loans for traditional colleges and universities, career and community colleges, and nursing and health programs. For the purpose of this review, we’ll be looking at the student loan covering traditional schools, but be aware there are other options if you’re considering a different path through college.
Details of the Wells Fargo Student Loan
Wells Fargo states its loan will cover 100% of your eligible college expenses, but there is a minimum of $1,000 and maximum of $120,000 you can borrow. Just like Federal loans, there’s a six-month grace period after graduation where you’re not required to make payments, and you also don’t need to make any payments while you’re enrolled.
The standard repayment term is 15 years with a Wells Fargo student loan, and you can choose to have a fixed or variable rate. Variable APRs range from 3.75% to 9.74%, while fixed APRs range from 3.99% to 9.99%. However, a 0.25% interest rate deduction applies if you enroll in automatic payments, and there are additional deductions that apply for Wells Fargo customers.
Wells Fargo also checks the amount of funds you request against what your school says you need. This allows you to borrow exactly what you need, so you don’t end up with more debt than you need to.
A payment example looks like this: if you borrow $10,000 on a 15 year repayment term with a fixed APR of 6.62%, your monthly payment will be $118.07. With a variable APR of 3.40% under the same conditions, your monthly payment will be $155.67.
How Does the Wells Fargo Student Loan Compare to Federal Loans?
Before you consider borrowing funds for school privately, you should fill out a FAFSA and see what Federal financial aid you qualify for. Grants and scholarships are always good to apply for as well, as they don’t need to be paid back. Private student loans tend to have higher interest rates and less favorable terms, and should be seen as a last resort to cover any tuition or living expenses you may have.
That said, how does Wells Fargo’s student loan stack up to Federal loans? On the lower end of the range, its interest rates are comparable – a Federal Stafford loan has a fixed APR of 4.29%, and a Federal Direct PLUS Loan has a fixed APR of 6.84%. Wells Fargo’s fixed APR starts at 3.99%, and its variable APR starts at 3.75%. Of course, you (or your cosigner) will need excellent credit to get the best rates offered with Wells Fargo, and on the higher end, its interest rates aren’t as competitive.
A word on variable rates in case you’re new to borrowing – they can change at any point. That means your loan can become more expensive a few years into repayment. Having a fixed rate loan means you’ll lock in the rate you were approved for over the entire life of the loan.
While fixed rates are higher, they provide peace of mind variable loans don’t. You may start out having a lower payment with a variable rate, but it could increase over the course of the ol15-year repayment term.
Speaking of, Wells Fargo has a repayment term of 15 years, and 10 years is standard for Stafford loans. An “extended” term is good and bad: you’ll likely have a lower monthly payment with a 15 year term, but a longer term also means you’ll pay more over the life of the loan (due to interest).
While it may seem like you have years until you need to worry about paying your loans back, it’s smart to consider the consequences now. As there’s no prepayment penalty with this loan, you can pay it back as quickly as you want so you don’t pay as much interest.
To apply for a Wells Fargo student loan, you must:
- Be enrolled in an undergraduate program and working toward a degree, certificate, or license
- Be a U.S. citizen, permanent resident alien without conditions, or an international student with temporary alien status (you’ll need a current U.S. address)
- Have an existing credit history and be able to meet Wells Fargo’s income and employment requirements
If you don’t qualify based on these criteria, or you doubt your credit history is sufficient; you can always apply with a cosigner. The good news is cosigners may be released from the loan after 24 on-time, consecutive payments. Other private lenders may not offer cosigner release.
Application Process and Documents Needed
When you apply, you’ll be brought to a screen asking you to choose a loan type, your school, field of study, and citizenship.
Wells Fargo recommends having the following information available before applying to make the process go smoothly:
- Your college or university information
- Social Security Number
- Personal information (address, contact information)
- How much you need
If you’re applying with a cosigner, they’ll be able to fill out their section of the application after you’ve completed yours.
The entire loan process takes around two to three weeks, so be sure to start your application sooner rather than later. The funds will automatically be sent to your school according to when the school requires it.
Remember, when you apply, a hard credit inquiry will be run on your credit (and on your cosigner’s credit, if applicable).
The Fine Print
There are no origination or application fees, and there’s no penalty for making payments early. However, if you miss a payment, a late fee may be assessed. This happens at the individual loan level, so it will vary from borrower to borrower. Wells Fargo provides you with late fee information on your billing statement, though.
Repayment Assistance Options
Wells Fargo offers a few repayment assistance options in case you fall on hard times and can’t afford to make a payment. Forbearance options include an extended grace period, military forbearance, and deferred payments if the area you live in is affected by a FEMA disaster. Note that with these options, interest continues to accrue even though you’re not required to make payments.
Additional assistance options include no payments required for two months, provided you’ve made consistent on-time payments in the past; six months of no payments due to financial hardship; and a loan modification program that will temporarily or permanently reduce how much you have to pay per month.
Who Benefits the Most from a Student Loan With Wells Fargo?
Just about any student can benefit from a student loan with Wells Fargo. You don’t have to be an existing customer to apply, although it does make the application process a bit easier. If you or your cosigner has excellent credit, you may be able to receive rates comparable to the Federal Direct PLUS Loan.
Again, make sure you exhaust all your Federal options before going with a private student loan. They offer numerous benefits private loans don’t, and aside from PLUS loans, they also don’t require a credit check or a cosigner (in most cases).
Get the Best Rates Possible
Want to get the best rates available to you? Then be open to shopping around at a few different lenders. Filling out several loan applications within a 45-day window is looked at as one single inquiry by the credit bureaus, and your credit score won’t take a huge hit. The biggest factors you want to compare with each lender are the APRs offered (and if variable rate loans or fixed rate loans are offered), repayment term(s), and if repayment assistance options are available.
Already have student loans and looking to refinance? Check out our top picks for refinancing your student loans.