When you’re applying for student loans, your first choice should always be federal aid, which you access via the Free Application for Federal Student Aid, or FAFSA. But if you’ve already maxed that out, a private student loan from iHelp may be a good option for you, particularly if you have a great credit score and can qualify for the lender’s lowest interest rate.
Financed by local community banks, iHelp booked its first student loans in January 2010 and has since managed over $600 million in private student loans. It’s also a subsidiary of the Student Loan Finance Corp., which services and originates all iHelp loans. That means borrowers only deal with one company from the time they apply until their loans are paid off, which can cut down on red tape if you’re having trouble making payments or have questions about your loan.
At a glance
- Interest rates: 3.18%, 5.08%, 6.23% or 8.71% APR (variable).
- Six-month grace period, 20-year term.
- Deferment and forbearance options available.
It should be noted that most private lenders offer a fixed rate option in addition to variable rates; iHelp offers only variable rates on the student loans it originates (though it does offer consolidation loans with a fixed rate).
The average interest rate for iHelp in-school loans is 6.63%, which is higher than current federal direct loan rates but slightly lower than rates for parent PLUS loans, currently fixed at 6.84%.
Unlike most private lenders, iHelp offers four tiers of interest rates, rather than a range of rates. The annual percentage rate — that’s your interest rate plus any fees — represents the actual cost of taking out your loan. If you apply and get the highest interest tier, 8.71% APR, you may be able to qualify for a .3% interest rate reduction once you’ve made 24 on-time payments. That discounted rate will continue as long as you pay on time.
In general, though, it’s better to opt for a fixed rate loan over a variable one. Shop around to make sure you’re getting the lowest possible interest rate on your student loans.
Do you qualify?
| Minimum qualifications | Average | |
|---|---|---|
| Credit Score | Mid-600s (plus at least three years of credit history) |
750 (borrower and co-signer combined) |
| Income | $18,000 a year | Borrowers: $31,600 a year Co-signers: $84,300 a year |
If you don’t meet the minimum requirements, you can use a co-signer, as 94% of iHelp borrowers have done. Just be sure that your co-signer has good credit and can afford to take on loan payments — they’ll be responsible for your loan if you ever stop making your payments. For iHelp, your co-signer’s current debts must equal less than 45% of annual income to qualify. If you use a co-signer, you’ll find out if you’re approved once the co-signer completes his or her part of the application.
Repayment options
Like many other private lenders, iHelp lets you defer your payments until you drop below half-time enrollment. However, to reduce long-term costs, you can also choose to begin making payments while you’re still in school: either interest-only payments, which iHelp encourages, or principal and interest payments. Those payments start 30 to 60 days after your school gets the funding from your loan.
If you defer payments, interest will accrue while you’re in school, and that amount will be capitalized, or added to your principal balance, when repayment begins. But you can always make a payment while still in school if you so choose — there are no prepayment penalty fees on iHelp loans.
After you leave school (or drop below half-time enrollment), you’ll have a six-month grace period before you have to start making regular monthly payments. If you opted to make interest and principal payments while in school, you will continue paying with no grace period.
If you find you have trouble making your payments, you have three additional options:
- Graduated repayment: This option lets you make interest-only payments for a set period of time and gradually build toward interest and principal payments. You can opt for a two-tier or four-tier graduated plan.
- Income-sensitive repayment: Payments are based on your gross monthly income. It’ll be 4% of your gross monthly income, equal to your monthly interest accrual or $16.67, whichever is greater. Your loan term may be extended up to five years.Like many other private lenders, iHelp lets you defer your payments until you drop below half-time enrollment. However, to reduce long-term costs, you can also choose to begin making payments while you’re still in school: either interest-only payments, which iHelp encourages, or principal and interest payments. Those payments start 30 to 60 days after your school gets the funding from your loan.
- Interest-only payments: You pay only your monthly accrued interest for 24 months, after which you begin making full payments.
Borrowers can also take advantage of forbearance for financial hardship if they can only make partial payments, or for other circumstances like military service or in the event of a natural disaster. Contact iHelp to determine if your circumstances qualify.
Where iHelp shines
Flexible repayment options
Unlike some private lenders, iHelp provides repayment options beyond deferment and forbearance to borrowers experiencing difficulty making monthly payments. Its income-sensitive option is particularly unusual in the private student loan market and is similar to the income-based repayment plans provided by federal loans.
Co-signer release available
Early release is a welcome feature if your co-signer doesn’t want to be tied to your student loans for the 20-year duration. To qualify for co-signer release, the borrower must make 24 on-time payments and must also be able to meet the minimum credit requirements on his or her own.
Where iHelp falls short
Variable rates are your only option
Since iHelp only offers a variable interest rate on its loans, your rate will fluctuate with the market — it’s subject to change every 90 days. Your interest rate does have a cap, but it varies depending on the state of the originating lender and corresponding usury laws.
Term is longer than most private student loans
The only term available for iHelp’s loans is 20 years, which is more than most private loan terms of five to 15 years. That means borrowers who make only the minimum monthly payments will shell out more over the life of their loan than they would with a shorter term. However, there is no prepayment penalty; if you can afford it, you can and should pay more than the minimum to pay down your debt faster.
Next steps
You can apply for a loan with iHelp on the lender’s website. Its “instant preapproval” tool can tell you if you’re likely to be approved without affecting your credit. To compare your options, check out NerdWallet’s private student loans page.
Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: ddelfino@nerdwallet.com. Twitter: @devondelfino.
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