Vermont students will have a new tool to help them pay for college this fall.

Vermont Student Assistance Corporation will be offering new fixed rate private loans later in August. VSAC has secured funding for $23 million in loans, which will be available on a first-come first-served basis.

While federal loans remain the best option for students—with lower interest rates and the best terms—there is a limit to how much money students can borrow, said Irene Racz, VSAC’s director of public affairs. As of July 1, federal loans are only available through the government.

Once a student has maxed out his or her federal loans, parents can take out federal parent loans, or the family can look at private loans, like VSAC’s.

“It’s another option for families to consider,” Racz said.

Although VSAC has offered private loans at variable rates for years, this is the first time it has offered a fixed rate loan, which means the interest rate is the same during the entire loan term. The interest rate is competitive, Racz said, and even a bit lower than federal parent loans.

The loans are designed for students to take out with a parent or guardian; they must have a cosigner. Depending on the cosigner’s credit rating, there may be an origination fee of 3 to 5 percent. Applicants with excellent credit will not have to pay an origination fee.

The interest rates depend on the method of repayment, ranging from 6.9 to 7.75 percent.

Interested families should e-mail privateloaninfo@vsac.org to get more information about the loans. VSAC officials are also keeping track of the inquiries, and will e-mail interested people when the applications become available.

Racz said each family should weigh its needs and circumstances before taking out any loan.

“We certainly still encourage students to borrow the maximum federal loans they are eligible for first,” Racz said. “It’s really important for the families to look at all the pros and cons of different options.”

For more information, visit www.vsac.org or call 1-800-798-8722.