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 SunTrust’s loans don’t stack up to federal programs, which offer better borrower protections — such as income-driven repayment — that could make your 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, orFAFSA.
At a glance
- Interest rates: 4.6% to 10.37% (fixed). 3.74% to 9.09% (variable).
- Six-month grace period and seven-, 10- or 15-year terms.
- Interest-only payments for 12 to 24 months; deferment and forbearance options available.
According to Mark Smith, SunTrust’s executive vice president and specialty consumer lending portfolio manager, the average amount borrowed is about $12,000. The servicer for SunTrust student loans is American Education Services, so that’s where you’ll make all payments.
Generally, the minimum you can take out is $1,001, with several state-based exceptions. You can take out up to $65,000 per year and up to an overall maximum of $150,000. If you take out a graduate or business school loan, you can borrow up to $95,000 per year and $175,000 overall.
Do you qualify?
| MINIMUM | AVERAGE | |
|---|---|---|
| FICO credit score | mid-600s | 750 |
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 business or graduate 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, as about 90% of SunTrust student loan borrowers do, according to Smith. Co-signers can be released when you make 48 consecutive on-time payments, or 36 consecutive on-time payments if you take out a private loan through Union Federal, a subsidiary of SunTrust.
Once you submit your application, you’ll know almost instantly if you’ve been approved. From there, you can choose from different repayment options and terms.
Repayment options
Like most private student loan companies, SunTrust offers borrowers enrolled in school several repayment options:
- Defer payments.
- Immediately make full payments (both interest and principal).
- Make interest-only payments.
- If your loan is $5,000 or more, you can also make partial-interest payments of $25 per month.
If you choose not to make payments while you’re in school, the interest that’s been adding up since you took out the loan will becapitalized, 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.
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.
If you have trouble making payments, you have the option to make interest-only payments for 12 to 24 months. Forbearance is also 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 would still accrue on your account and would be capitalized afterward.
SunTrust recently released a new feature: in-school refinancing. That lets you refinance your existing student debt and roll it into the current 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 on all loan types.
- 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.
If you apply by Aug. 31, 2016, you can get an additional 0.25% interest rate reduction through a seasonal offer from the company. Bonus: There’s a 1% principal reduction per loan at graduation.
Where SunTrust falls short
INTEREST RATES ARE HIGHER THAN FEDERAL RATES
Compared with federal rates, which are currently 3.76% on direct loans for undergraduates, SunTrust’s fixed rates can’t compete. If you’re willing to opt for a variable interest rate, there’s a chance that your rate could be 3.74%, but it could change depending on the state of the market. 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
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