There are a few main factors to consider when taking out a private student loan: annual percentage rate (APR), principal, loan term, monthly payment, and total cost.

Annual Percentage Rate (APR): APR is the amount you’ll pay to borrow the money, including interest and fees, given as a yearly percentage. The higher the APR, the more you’ll owe in return for the loan. In general, your APR is determined by your creditworthiness. If you or your cosigner have a high credit score, you’re more likely to receive a lower APR. On the other hand, if you or your cosigner have a low credit score, you’re more likely to receive a higher APR.

Principal: Principal is the amount that you are borrowing minus fees, penalties, interest and other costs.

Loan Term: Loan term, also called loan duration, is the length of time you’ll have to pay off your loan. Keep in mind that the longer your loan term, the more you’ll have to pay because interest will continue to accrue. In general, the shorter the loan term, the higher the monthly payments, but the faster the loan will be paid off. The longer the loan term, the lower the monthly payments, but the slower the loan will be paid off, meaning you’ll have to pay more interest over time.

Monthly Payment: The monthly payment is the amount you owe each month. It’s made up of principal, interest and other fees.

Total Cost: Total cost refers to the total loan amount, or overall principal and interest, you’ll pay over the life of your student loan.

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