Kim Porter is a former contributor to Bankrate, a personal finance expert who loves talking budgets, credit cards and student loans. Porter writes for publications such as U.S. News & World Report, Credit Karma and Reviewed.com. When she’s not writing or reading, you can usually find her planning a trip or training for her next race.
Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editoral integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.
Federal student loans are almost always a better first choice than private student loans. However, private student loans can help cover tuition, room and board, fees and other costs of higher education once you've reached your federal limit. Private student loans can be useful for:
Borrowers who don't qualify for federal aid, including international students.
Borrowers who have reached their federal student loan limits.
Borrowers who would like the flexibility of a variable interest rate.
Borrowers with great credit scores.
Bankrate's ranking of the best private student loans weighs interest rates, loan types, terms, fees, unique features and more to give you a starting point in your search for college funding. The resources below can also help you decide whether a private loan is right for you and find the best interest rate for your situation.
1
Look for loans specific to your program or needs.
Some lenders offer loans that are specific to medical school, an apprenticeship, a business degree and more, and it may be best to start with lenders that specialize in your degree. If you don't have anyone willing to co-sign, you should also narrow your search to lenders that have no-co-signer options.
2
Get prequalified.
Choose at least three lenders to prequalify with. This will give you a more accurate picture of your options and available interest rates.
3
Compare rates and terms.
Once you have your rate offers, you'll be able to pick from a variety of interest rates and repayment terms. A low interest rate may be the deciding factor, but you should also use a calculator to compare the overall cost of your loan with each lender.
4
Decide which features are important.
If all your prospective lenders offer similar interest rates and terms, dig into each company's fees and unique features. You may decide to go with a lender that offers a longer grace period, for instance, or one that does not charge origination fees.
1
Check your credit score.
Some lenders will list credit score requirements on their websites, but even if they don't, it's safe to assume that you'll need a credit score in the mid-600s to qualify for a student loan.
2
Enlist a co-signer if needed.
If you don't have much credit history or a less-than-stellar score, you may need to get a co-signer. This person — usually a parent or family member — signs your loan with you in order to help you get approved.
3
Get prequalified.
The rates that lenders advertise aren't necessarily the rates you'll receive. By prequalifying with a few lenders, you can compare offers to see which loan is best for your needs.
4
Send in an application.
Once you've chosen a lender you'll send in your full application, which will ask for details like your Social Security number, financial history and school information. You'll also go through a hard credit check at this stage.
5
Wait for verification.
The lender will process your application and confirm your cost of attendance with your school. The lender will typically disburse the funds directly to your school after a few weeks.
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BANKRATE'S MOST VISITED PARTNER
Competitive rates, no origination fees, and flexible repayment options.
The Bankrate scoring system evaluates lenders' affordability, availability and customer experience based on 11 data points selected by our editorial team.
An annual percentage rate (APR) represents the interest and fees you'll pay on top of your initial amount every month. A fixed rate will not change during your repayment period.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
4.6
Bankrate Score
Fixed APR From
4.50-
14.83%
with AutoPay
Loan Amount
Cost of attendance minus aid
Term: 10-15 yr
Min. Credit
Not disclosed
Competitive variable and fixed interest rates
No origination fee or prepayment penalty
Interest, $25 Fixed, or Deferred Repayment Options
Rates: Lowest rates shown include the auto debit discount. Fixed - 4.50% APR-14.38% APR and Variable - 5.49%-15.83% APR. Additional information regarding the auto discount:
Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 2/27/2023. No payment penalty: Although we do not charge a penalty or fee if you prepay your loan; any prepayment will be applied as outlined in your promissory note- first Unpaid Fees and costs, then to Unpaid interest, then to Current Principal.
Terms: Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years.
Variable Rate: 5.49% to 15.83% APR (with autopay)
Fixed Rate: 4.50% to 14.83% APR (with autopay)
Effective Date: 2/27/2023
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4.7
Bankrate Score
Fixed APR From
4.49-
13.80%
with AutoPay
Loan Amount
$1k–$500k
Term: 5-15 yr
Min. Credit
640
Easy online application!
No origination fees, late fees, and no insufficient fund fees. Period
Flexible repayment options to help you find the right loan for you
0.25% discount when you set up autopay*
0.125% discount for returning borrowers and families with multiple children in college
UNDERGRADUATE LOANS: Fixed rates from 4.49% to 13.80% annual percentage rate ("APR") (with autopay), variable rates from 4.99% to 13.07% APR (with autopay). GRADUATE LOANS: Fixed rates from 5.25% to 13.60% APR (with autopay), variable rates from 5.49% to 13.07% APR (with autopay). PARENT LOANS: Fixed rates from 6.50% to 13.98% APR (with autopay), variable rates from 6.32% to 13.13% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 01/30/2023.
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4.1
Bankrate Score
Fixed APR From
3.65-
16.16%
with AutoPay
Loan Amount
$1k–$400k
Term: 5-20 yr
Min. Credit
640
Compare real, pre-qualified rates from up to 10 lenders in under 2 minutes
No hidden fees, origination fees or prepayment penalties
Checking your rates won't affect your credit score
Variable rates will fluctuate over the term of the borrower's loan with changes in the LIBOR rate. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Rates are subject to change at any time without notice. Your actual rate may be different from the rates advertised and/or shown above and will be based on factors such as the term of your loan, your financial history (including your cosigner’s (if any) financial history) and the degree you are in the process of achieving or have achieved. While not always the case, lower rates typically require creditworthy applicants with creditworthy co-signers, graduate degrees, and shorter repayment terms (terms vary by lender and can range from 5-20 years) and include loyalty and Automatic Payment discounts, where applicable. Loyalty and Automatic Payment discount requirements as well as Lender terms and conditions will vary by lender and therefore, reading each lender’s disclosures is important. Additionally, lenders may have loan minimum and maximum requirements, degree requirements, educational institution requirements, citizenship and residency requirements as well as other lender-specific requirements.
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4.3
Bankrate Score
Fixed APR From
4.74-
15.32%
with AutoPay
Loan Amount
$1k–$500k
Term: 5-15 yr
Min. Credit
680
Competitive fixed and variable rates starting at 4.49%*
Four different repayment options
Choice of loan terms (5, 8, 10, and 15 years)*
No application, origination or disbursement fees
Borrow up to 100% of your school's cost of attendance*
*College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 3/1/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
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INCOME BASED REPAYMENT
Income-Based Repayment (IBR) is a student loan repayment program that regulates the monthly repayment amounts based on a percentage of one's gross earned income for a set period of time. IBRs are an alternative to traditional private student loans.
Income Based Repayment - No Cosigner Required
Get approved in minutes. Pre-qualify without affecting your credit score.
No cosigner required
Get approved in minutes
Pre-qualify without affecting your credit score
Income-based repayment with built-in protections, like deferred payments if you lose your job
No in-school payments. Monthly payments only begin when you land a job grossing at least $30,000 yearly.
Never pay more than the maximum payment cap.
Edly Student IBR Loans are unsecured personal student loans originated by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.
Loans from $5,000 - $20,000
Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
Payments deferred for the first 12 months during final year of education.
After which, $270 Monthly payment for 12 months.
Then $379 Monthly payment for 44 months.
Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.
About this example
The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.
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4.5
Bankrate Score
Fixed APR From
4.45-
14.60%
with AutoPay
Loan Amount
$1k–$350k
Term: 5-20 yr
Min. Credit
650
Lower rates based on your future potential and full financial profile, not just your FICO score
Flexible terms that let you pick your exact monthly payment
Lifetime service provided in-house. Unlike other lenders, we will never pass you off to third-party servicers
No fees for origination, prepayment, or loan disbursement
Two-minute rate check with no obligation at www.earnest.com
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.70% APR to 14.85% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 14.65% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
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4.0
Bankrate Score
Fixed APR From
4.89-
10.51%
with AutoPay
Loan Amount
$1k–$500k
Term: 5-20 yr
Min. Credit
660
2-Minute rate check with no impact on your credit score
No origination fees or prepayment penalties
Network of 300+ community lenders means higher chances for approval and lower rates
Available for private and federal, undergraduate and grad school student loans
0.25% Interest Rate Reduction with automatic payments
One of the largest unemployment protection offers in the market; up to 18 months
Cosigner release available after 12 monthly payments
Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender's credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender's eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.
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BEST WITH CO-SIGNER
Adding a co-signer increases loan approval likelihood and could help you borrow more money or get a lower interest rate – meaning lower monthly payments & less interest paid over the life of the loan.
4.0
Bankrate Score
Fixed APR From
4.99-
14.25%
with AutoPay
Loan Amount
$1k–$350k
Term: 5-15 yr
Min. Credit
640
With the most options of any lender, we'll help you find a great way to pay for college
No application, origination or disbursement fees
Multi-year approval provides a simple way to secure funding for additional years in school†
Interest rate discounts available.
Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of March 1, 2023, the 30-day average SOFR index is 4.52%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
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4.2
Bankrate Score
Fixed APR From
3.98-
11.99%
Loan Amount
$1k–$500k
Term: 5-15 yr
Min. Credit
680
Prequalify to estimate your rate without affecting your credit score,Submit online application in minutes,No application fees, origination fees, or prepayment penalties,Low rates and flexible repayment terms to fit your needs and goals,Student Loan Advisor to guide you through the application process
The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
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4.3
Bankrate Score
Fixed APR From
4.62-
16.24%
Loan Amount
$2k–$200k
Term: 5-20 yr
Min. Credit
Not disclosed
No cosigner required, ever.
No origination fees. No application fees. No late payment fees. No prepayment penalties.
0.25%-1.00% autopay discounts available
Check rate without impacting your credit
Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 3/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
The Bankrate guide to choosing the best private student loans
When shopping for a student loan, look for a competitive interest rate, flexible repayment terms that meet your needs, generous hardship options and minimal fees. Loan details presented here are current as of February 13, 2023. Check the lenders’ websites for any updates.
The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability. To learn more about how we chose lenders, read our methodology at the bottom of the page.
Compare private student loan interest rates in March 2023
Overview:College Ave offers private loans for students seeking undergraduate, graduate, dental, law, medical and business degrees. Parents can also take out loans on behalf of their college-bound kids, and students interested in attending community college or receiving career training may also apply.
Why College Ave is best for international students: College Ave is one of the only lenders that has loans available for international students attending school in the U.S. If students have a qualified co-signer who is a U.S. citizen, they may be eligible for a private loan from College Ave.
Pros
Loans for international students and students attending community college or career-training programs.
Low starting interest rates.
Multiyear loan option.
Cons
No transparent eligibility requirements.
High rate caps.
Short six-month grace period for undergraduates.
Borrowers must be U.S. citizens or permanent residents. International students must have a U.S. social security number and a qualified co-signer. College Ave does not state its credit or income requirements, but students must make satisfactory academic progress while at school. Students may be enrolled full time, half time or less than half time.
College Ave may charge a late fee, though it doesn't specify the amount.
Overview:Earnest offers private student loans for students seeking undergraduate, graduate, business, law and medical degrees. Borrowers may qualify on their own or use a co-signer.
Why Earnest is best for applying without a co-signer: Earnest does not require undergraduate students to have a co-signer, which is rare among private lenders. You will need to meet financial and credit requirements, but Earnest is a good option for students who can qualify for a loan on their own – especially since it doesn't offer co-signer release.
Pros
No co-signer required.
Nine-month grace period.
Skip a payment once a year.
Cons
Minimum credit score of 650 and minimum income of $35,000 required.
No co-signer release option.
Loans not available to residents of Nevada.
Borrowers or co-signers must be U.S. citizens or permanent residents and be the age of majority. Undergraduate students must be enrolled at least half time, but graduate students may be enrolled less than half time.
Borrowers or co-signers must have a minimum FICO score of 650, at least three years of credit history, a minimum income of $35,000 and a history of on-time payments. Both the primary borrower and the co-signer must not have a bankruptcy on their credit reports or any accounts currently in collections.
Earnest charges an $8 returned payment fee and a Florida stamp tax of 0.35 percent.
Overview: Of all the lenders on this list, Sallie Mae offers the most extensive menu of private student loan options. There are loans for students seeking undergraduate, graduate, medical, dental and law degrees.
Why Sallie Mae is best for part-time students: Most lenders require students to attend their program at least half time. Sallie Mae offers broader eligibility requirements, so even students attending less than half time or looking to fund a study abroad program may get a student loan from Sallie Mae.
Pros
Loans available for borrowers enrolled less than half time, attending online or summer classes, studying abroad or enrolled in professional certification courses.
Free study help and college expense calculators.
Borrow up to the full cost of attendance.
Cons
High rate caps.
Short six-month grace period.
No transparent eligibility requirements.
Borrowers must be U.S. citizens or permanent residents or have a co-signer who is. Sallie Mae doesn't list many of its eligibility requirements, but it says that it looks at borrowers' history of borrowing money and paying it back on time.
Sallie Mae may charge a 5 percent late fee, up to $25, along with a $20 returned check fee.
Overview:SoFi offers undergraduate student loans, law school loans, medical school loans, MBA loans and parent loans, plus other financial products such as personal loans and mortgages.
Why SoFi is best for online borrower resources: SoFi goes beyond simply providing student loans; it also offers a mobile app, financial planning advice, unemployment protection and more.
Pros
Unemployment protection program.
Mobile app available.
Member benefits and rate discounts.
Cons
Short six-month grace period.
Vague eligibility requirements.
Maximum repayment term of 15 years.
Each borrower must be a U.S. citizen, permanent resident or visa holder. Borrowers or co-signers must be employed or have sufficient income from other sources. Students taking out loans must be enrolled at least half time in a degree-granting program at an eligible institution. Associate degree-seekers are not eligible.
SoFi does not charge any fees.
What is a private student loan and how does it work?
A private student loan is a loan used to cover qualifying educational expenses. You can take out private student loans through banks, online lenders, credit unions and sometimes through colleges and state agencies. These usually have higher borrowing limits than federal student loans and may offer lower interest rates for borrowers with good credit, but they come with fewer borrower protections.
To qualify, you’ll need to meet the lender’s eligibility requirements and go through a credit check. Applicants with good or excellent credit tend to get the lowest interest rates, but because undergraduates usually don’t have extensive credit histories, they typically need a co-signer to take out a private student loan.
Some lenders specialize in student loans without a co-signer for undergraduates. To determine your eligibility and rate, they may evaluate your performance in school, earning potential, work history and more.
What can private student loans be used for?
While the restrictions vary by lender, generally you can use private student loans for:
Tuition.
Fees.
Room and board.
Books and supplies.
Transportation.
Child care.
Typically you cannot use student loans for:
Clothes.
Vacations.
Restaurant dining.
Business expenses.
Car or home purchases.
What happens after you apply for a private student loan?
Once you've applied for a student loan and you're approved, your lender will communicate with your school to verify the cost of attendance. This certification process may take a few weeks. At that point, funds will be disbursed to your school for tuition and fees and any remaining amount will be refunded to you.
Generally, you don't need to worry about repaying your student loan until after your grace period. A standard grace period is six months after you graduate or drop below half-time enrollment, but it may be longer with some private lenders. At that point, you'll be responsible for paying back the principal and interest.
With many private companies, you have the option of selecting a payment plan while you're in school to decrease how much interest accumulates. Once your funds are disbursed, you may have the option to make interest-only payments or a small flat monthly payment.
Some lenders also offer private student loans for international students or people who are in a residency program, studying abroad, attending community college, enrolled in a career-training school or studying for the bar exam. There are even student loans for borrowers with thin credit or a less robust financial history, although student loans for bad credit might be more expensive.
Pros and cons of private student loans
Before applying for a private student loan, consider the benefits and drawbacks of this type of financing.
Pros:
High borrowing limits: Private loans will often have higher borrowing limits than federal loans, with some covering up to the full cost of enrollment.
Low interest rates: Borrowers with good credit could qualify for lower interest rates than federal student loans offer.
Flexible enrollment requirements: Federal student loans require you to be enrolled at least half time to qualify, but some private lenders offer loans for borrowers taking only a few classes or attending summer school.
Choice between fixed and variable rates: You can customize your repayment by choosing either a fixed interest rate or a variable interest rate.
Cons:
No federal protections or benefits: Federal student loans come with benefits like standardized forbearance and income-driven repayment plans. Private lenders have fewer of these options available.
Average credit required: While most federal student loans don't check your credit, you will likely need a credit score in the mid-600s to qualify for a private student loan.
High rates for borrowers with poor credit: The lower your credit score, the higher your interest rates with private student loans. If you have a credit score near the lender's minimum requirement, your interest rate could be in the double digits.
How does a private student loan differ from a federal student loan?
Up to $31,000 for dependent undergraduates, up to $57,500 for independent undergraduates, up to the full cost of attendance for graduates
Varies by lender; often up to the full cost of attendance
What are the interest rates?
4.99% for undergraduates, 6.54% or 7.54% for graduates; all fixed rates
1.29% to 14.96%; may be fixed or variable
What are the benefits?
Income-driven repayment plans, loan forgiveness options, extensive deferment and forbearance
Low interest rates for borrowers with good credit, potential discounts and rewards, larger loan amounts
What are the drawbacks?
Limited loan amounts for undergraduates, only one interest rate option
Credit check required, high interest rates for borrowers with poor credit
How do student loan interest rates work?
Most private student loans offer two types of interest rates: variable and fixed. With a fixed interest rate, the rate doesn’t change throughout the life of the loan. Borrowers who prefer predictable payments may prefer fixed rates, although the rates usually start a little higher.
Variable rates, on the other hand, are tied to changes to an index, such as the Libor or SOFR. These rates may go up or down during repayment, although lenders usually limit how high the rate can go.
Every month, your bill includes part of the principal — the base loan amount you borrowed — and interest charges. While your monthly payment will be the same if you have a fixed interest rate, more and more of each payment will go toward the principal and less toward interest with each successive month.
You can use a student loan calculator to determine how different interest rates will affect your monthly payment over time.
FAQ about private student loans
If you have bad credit, it’s best to start by applying for federal student loans, since these don't have credit requirements. If you still need funding from private student loans, you may need a co-signer to qualify. A co-signer agrees to foot the bill if you fall behind on payments, so make sure they understand what they’re getting into before signing up. You can also start by searching for lenders specializing in loans for borrowers with bad credit.
Some lenders do not require co-signers for private student loans. However, according to private lender Sallie Mae, students are nearly four times more likely to be approved for a private student loan with a co-signer. That’s because private student loans are largely based on creditworthiness. A co-signer can help you qualify for the loan and get better loan terms if you're young and have minimal credit history.
Loan limits vary by private student loan lender. However, many of them let you borrow up to the full cost of attendance at your school, minus other financial aid you've received.
Many lenders offer deferment and forbearance programs, although they vary by loan type and servicer. Here’s how the two types of relief work:
Student loan deferment: If your loans are in deferment, you won’t have to make payments during specific windows, such as while you’re enrolled in school. You won’t pay a penalty for missing a payment during these time frames, and it won’t affect your credit. In many cases, interest will continue to accrue, though this depends on the lender.
Student loan forbearance: If you’re financially struggling, you might be able to enroll in a forbearance program. These allow you to temporarily pause payments while you’re unemployed, ill, affected by a natural disaster or going through another type of financial hardship. In forbearance, your interest may continue to accrue.
In most cases, private student loan lenders will disburse student loan funds directly to your school, not to you. This ensures that funds go toward education costs like tuition and fees. In general, any remaining amount after tuition and fees is refunded to you to use for books, supplies and housing.
In August 2022, President Joe Biden’s administration announced the cancellation of up to $20,000 in federal loan debt for qualified borrowers. However, the program is currently on hold while the Supreme Court debates the legality of the program. The verdict will be announced late Spring/ early Summer 2023. Oral arguments begin on February 28th.
Biden has proposed numerous policies that could benefit private student loan borrowers, including subsidized college tuition for students below a certain income threshold. While Biden's proposals have forgiven over $20 billion in federal student loan debt, many of his relief plans that could impact private loans are locked in negotiations.
Methodology
To find the best private student loan lenders, Bankrate first searched for lenders that are reputable and widely available. It was also important to find lenders with relatively low starting interest rates.
To narrow down the field, we then compared repayment terms, number of loan types and eligibility requirements to determine which lenders would cater to a variety of borrowers. For our top picks, we selected companies that not only make private student loans affordable, but also offer a variety of unique features for borrowers with specific needs.