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Refinancing student loans can help lower your interest rate so you pay less over time. Private student loans can be used to pay for the costs of higher education, but they originate with private entities — such as banks, credit unions and online lenders — rather than the federal government. Private student loans typically come with a fixed monthly payment and a fixed or variable interest rate, and you may be able to delay repayment until after you graduate from school.
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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 the publish date. Check the lenders’ websites for more current information. The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability.
| Lender |
Best for
|
Fixed APR*
|
Variable APR*
|
Loan Terms
|
Loan Amount
|
|---|---|---|---|---|---|
| Ascent |
Loans without a cosigner
|
3.53%–14.50%
|
2.69%–12.98%
|
5–20 years
|
$1,000–$200,000
|
| Citizens Bank |
Multiyear approval
|
4.25%–11.53%
|
1.13%–10.97%
|
5–15 years
|
$1,000–$350,000
|
| College Ave |
Quick application process
|
3.49%–12.99%
|
1.24%– 11.98%
|
5–20 years
|
$1,000–the total cost of attendance
|
| CommonBond |
Personalized mentoring
|
5.56%–10.74%
|
3.46%–9.39%
|
Not specified
|
$2,000–the total cost of attendance, with a $500,000 lifetime maximum
|
| Earnest |
Flexible repayment terms
|
Starting at 3.49%
|
Starting at 1.24%
|
Not specified
|
$1,000–the total cost of attendance
|
| Sallie Mae |
Part-time students
|
4.25%–13.87%
|
1.25%–13.12%
|
15 years
|
$1,000–the total cost of attendance
|
| SoFi |
Loans without fees
|
4.13%–11.98%
|
1.77%–11.89%
|
5–15 years
|
$5,000–the total cost of attendance
|
| Wells Fargo |
Community college & trade schools
|
4.53%–12.99%
|
2.68%–10.49%
|
Up to 15 years
|
$1,000–$250,000
|
*Rates include autopay discount.
A student loan is a loan that can help students pay for college-related fees, like tuition, textbooks and housing. Prospective borrowers can usually choose a fixed or variable interest rate, and many federal student loans allow borrowers to stall payments for a six-month grace period after graduation.
While student loans can provide financial relief, they are not the same thing as financial aid, grants or scholarships. Unlike those forms of aid, federal and private student loans need to be paid back — with the extra cost of interest.
Learn more about the top student loan definitions you need to know.
Here are a few important factors to be aware of before applying for a student loan.
| Rates | Fixed or variable |
|---|---|
| Repayment plans | Typically 5 to 20 years |
| Limits | Up to the total cost of attendance with some lenders |
| Fees | May include application fees, origination fees, late payment fees and more |
Private student loans differ from federal student loans because they’re originated by private institutions such as banks, credit unions and online lenders rather than the federal government. Here are some of the pros and cons of each type of loan.
Current interest rates on student loans vary based on the where the loan originates, the type of interest rate and the creditworthiness of the borrower.
| Loan Type |
Fixed APR*
|
Variable APR*
|
|---|---|---|
| Refinance Student Loan Rates |
2.78% to 8.99%
|
1.89% to 8.99%
|
| Private Student Loan Rates |
3.49% to 14.5%
|
1.13% to 12.98%
|
| Federal Student Loan Rates |
2.75% to 5.3%
|
N/A
|
*Includes autopay discount
The federal student loan interest rate for undergraduates (Direct Subsidized Loans and Direct Unsubsidized Loans) is 2.75 percent. Federal interest rates for graduate or professional students (Direct Unsubsidized Loans) is 4.3 percent, while for parents (Direct PLUS Loans) the rate is 5.3 percent.
Private student loan interest rates have a much broader range. Variable-rate loans may charge anywhere from 1.5 percent to 12 percent APR, while fixed-rate loans may charge from 4 percent to 13 percent. The rate you're quoted for a private student loan typically depends on your credit score, loan amount and desired repayment period.
When the Fed cut rates to near-zero in response to the economic effects of the coronavirus pandemic, student loan rates also plummeted. Federal rates set for the 2020-21 school year are at record lows, and private student loan companies have slashed their rates in response.
However, these interest rate cuts will not affect everyone. If you already hold a loan with the federal government, you won't see your interest rate change. The same is true for fixed-rate private loans. You can take advantage of interest rate fluctuations only if you take out a new loan, have an existing variable-rate loan or refinance your current loans.
Just keep in mind that if you refinance your federal loans with a private lender, you will lose federal benefits. That's particularly important now, since payments and interest rates on federal student loans are suspended through Dec. 31, 2020.
There are student loans available for nearly every stage of your higher education journey. Here are some examples of the different types of student loans:
Although federal student loans generally come with more flexible repayment options and borrower protections, private student loans can be a good option in some cases.
Because federal student loans have low borrowing limits, private student loans can help fill the gaps if you still need to borrow money after applying for grants, scholarships and federal financial aid. Annual percentage rates (APRs) on private loans also usually start lower than federal loan interest rates. However, if you have a variable-rate loan, your APR (and monthly costs) can increase over the life of the loan.
Private student loans can be a good option if you don't qualify for federal aid or if you've hit your federal limit. However, applying for a student loan can be tricky, and there are some important things you need to know before applying. Private student loans are available at banks, online lenders and credit unions, so the application process can be done on the lender websites or in person. When applying, here are the steps that you should consider taking:
Choosing the best private student loan can be overwhelming, but there are a few things you can do to ensure that the process goes smoothly. The first thing to consider is the lender's reputation. Does the lender have positive reviews? You should also compare offers from a few lenders to see which will ultimately be cheapest for you — different lenders will offer you different interest rates, fees and repayment terms, so seek out the combination that makes the most sense for your financial situation. It's also important to think about what you are looking for in the "best" private student loan. Bankrate has outlined the best student loans for multiple needs, so you can choose the loan for your specific situation.
There may be instances where you want to refinance your student loans. This can only be done through private lenders, so carefully think through the implications before giving up your federal protections.
Refinancing may be a good option if you'd like to consolidate multiple loans into a single loan or if interest rates have fallen significantly since you first took out your fixed-rate loan. Refinancing interest rates currently range anywhere from 2 percent to 9 percent and can be fixed or variable.
When you refinance your student loans, you take out a new loan from a private lender for the amount you still owe on your current student loans. You then use the new loan funds to pay off your existing loans.
From there, you'll make regular payments on your new loan, hopefully with a better interest rate, until the loan is paid off.
Overview: Ascent offers undergraduate and graduate private student loans in all 50 states. Borrowers without a co-signer have their own loan option, which is a rarity in the private student loan space. The lender also offers a longer-than-average period of forbearance, which is a hardship program that allows you to temporarily stop making payments.
Perks: If you don’t have a co-signer, you may be able to qualify for a loan based on your school, graduation date, major and cost of attendance. You can also apply for forbearance between one and three months, for a maximum 24 months over the life of the loan. Borrowers are eligible to apply for Ascent scholarships and can even earn various types of rewards. These include a 1 percent cash back reward at graduation, based on the original principal balance, and up to $525 for each referred friend who signs up for and receives a student loan.
What to watch out for: Among lenders on this list, Ascent advertises the highest rate caps — which can significantly add to your overall cost of borrowing. Additionally, independent borrowers will need to meet eligibility requirements: To apply without a co-signer, you must be a full-time junior, senior or graduate student with a GPA of at least 2.9.
| Lender | Ascent |
|---|---|
| APR | Fixed: 3.53%–14.50% (with autopay) Variable: 2.69%–12.98% (with autopay) |
| Loan amounts | $1,000–$200,000 |
| Loan terms | 5 to 20 years |
| Fees | None |
Overview: Citizens Bank offers private student loans to undergraduate students, graduate students and parents. Borrowers can get approved for multiple years of student loans.
Perks: Citizens Bank will run a hard credit inquiry when you apply and will let you know if you qualify for the multiyear loan program. Once approved, you can request funds in subsequent years without supplying additional income documentation, so the process is faster, and Citizens will run only soft credit checks. In addition to the 0.25 percent autopay discount, you can take an additional 0.25 percent APR discount on a private student loan if you have an eligible Citizens Bank account. Borrowers can use loan funds to pay for school costs and child care, which is a rarity among lenders.
What to watch out for: Citizens Bank isn't available in all 50 states, and people attending two-year colleges or career training programs aren't eligible. The company also has no firm deferment or forbearance policies; hardship options are treated on a case-by-case basis.
| Lender | Citizens Bank |
|---|---|
| APR | Fixed: 4.25%–11.53% (with autopay) Variable: 1.13%–10.97% (with autopay) |
| Loan amounts | $1,000 to $350,000 depending on program |
| Loan terms | 5 to 15 years |
| Fees | None |
Overview: College Ave is an online lender that offers private student loans to undergraduate students, graduate students, parents and students attending community college and career programs. The lender specializes in a simple application process with an instant decision.
Perks: Altogether, College Ave says that the application process takes three minutes. Borrowers can check their potential loan terms and whether they prequalify for a loan without impacting their credit. Aside from its loans geared toward four-year degrees, College Ave also offers private loans for students attending community colleges and career programs. Eligible borrowers earn $150 upon graduation, awarded as a statement credit to the loan balance.
What to watch out for: Although College Ave says that it will work with borrowers experiencing financial hardship, it doesn't have a defined forbearance program. Instead, each situation is handled on a case-by-case basis. This may cause problems if you need to postpone payments due to financial difficulties later on.
| Lender | College Ave |
|---|---|
| APR | Fixed: 3.49%–12.99% (with autopay) Variable: 1.24%–11.98% (with autopay) |
| Loan amounts | $1,000 up to total cost of attendance |
| Loan terms | 5 to 20 years |
| Fees | None |
Overview: CommonBond is an online lender that offers undergraduate and graduate private student loans. Borrowers can access individualized money advice and generous hardship programs.
Perks: CommonBond loans come with a free “money mentor,” a person who helps you navigate personal finances before, during and after college. CommonBond also offers forbearance to students who encounter economic hardship after graduation.
What to watch out for: You’ll need a co-signer to apply for a private student loan, but you can request to have them released after making 24 on-time payments.
| Lender | CommonBond |
|---|---|
| APR | Fixed: 5.56%–10.74% (with autopay) Variable: 3.46%–9.39% (with autopay) |
| Loan amounts | $2,000 up to total cost of attendance, with a $500,000 lifetime maximum |
| Loan terms | Not specified |
| Fees | Late fee: 5% or $10; Returned check fee: $5 |
Overview: Earnest is an online lender that funds private student loans to undergraduate and graduate students and offers unique repayment options.
Perks: Borrowers who choose a deferred payment plan get a nine-month grace period on payments after graduation, which is three months longer than most lenders. Borrowers are also allowed to skip one payment every 12 months.
What to watch out for: The “skip payment” feature comes with some restrictions; for example, the payment counts toward normal lifetime forbearance limits. Also, Earnest doesn’t offer private student loans in Nevada.
| Lender | Earnest |
|---|---|
| APR | Fixed: Starting at 3.49% (with autopay) Variable: Starting at 1.24% (with autopay) |
| Loan amounts | $1,000 up to total cost of attendance |
| Loan terms | Not specified |
| Fees | Returned payment fee: $8; Florida stamp tax: 0.35% |
Overview: Sallie Mae offers private student loans to undergraduate students, graduate students, parents and students enrolled in career-training programs. This is one of the only private student loan lenders that doesn’t require borrowers to attend school full or half time, which makes it a standout option if you’re studying abroad, taking just one or two classes at a time or taking a professional certification course.
Perks: Borrowers get four months of free access to Chegg Study, which provides study and homework support for any subject.
What to watch out for: While borrowers can apply 12 months of forbearance over the life of the loan, in three-month increments, you'll have to pay $50 per loan, with a maximum of $150 per account, to get forbearance.
| Lender | Sallie Mae |
|---|---|
| APR | Fixed: 4.25%–13.87% (with autopay) Variable: 1.25%–13.12% (with autopay) |
| Loan amounts | $1,000 up to total cost of attendance |
| Loan terms | 15 years |
| Fees | Late fee: 5% or $25; Returned check fee: Up to $20 |
Overview: SoFi is an online lender that offers private student loans for undergraduate students, graduate students and parents. Among its perks, SoFi says that it doesn’t charge any fees, which cuts down on the overall cost of borrowing.
Perks: In addition to the routine 0.25 percent autopay discount, SoFi customers with an eligible account may qualify for a member rate discount of 0.125 percent. Borrowers get access to free career coaching, and if you lose your job through no fault of your own, you’re eligible to postpone loan payments in three-month increments (up to 12 months total) and receive job placement assistance.
What to watch out for: SoFi doesn’t offer a co-signer release, and the minimum loan size is higher than that of most lenders.
| Lender | SoFi |
|---|---|
| APR | Fixed: 4.13%–11.98% (with autopay) Variable: 1.77%–11.89% (with autopay) |
| Loan amounts | $5,000 up to total cost of attendance |
| Loan terms | 5 to 15 years |
| Fees | None |
Overview: Wells Fargo is a bank that offers private student loans for undergraduate students, graduate students, parents and those attending career-training programs. The low rates, range of options and flexible hardship options make this lender a solid choice — whether you’re pursuing a four-year degree or nontraditional schooling.
Perks: There’s a handful of hardship options for struggling borrowers: short-term payment relief for up to two months, forbearance for up to 12 months, payment options if you’re already past-due on the account and a loan modification program. In addition to the 0.25 percent autopay discount, borrowers may also qualify for a discount of up to 0.50 percent when they have a qualified Wells Fargo investment or checking account. Plus, borrowers get a dedicated student loan adviser.
What to watch out for: Although Wells Fargo offers hardship programs, not all of its private student loans are eligible for forbearance.
| Lender | Wells Fargo |
|---|---|
| APR | Fixed: 4.53%–12.99% (with autopay) Variable: 2.68%–10.49% (with autopay) |
| Loan amounts | $1,000 to $250,000 depending on program |
| Loan terms | Up to 15 years |
| Fees | None |
Here’s the general process you can expect when applying for a private student loan:
When choosing a student loan lender, look for low interest rates, limited or no fees and flexible repayment terms. You also want to make sure that the lender offers hardship options in case you have financial difficulties during repayment.
Starting your repayment while in school can help reduce the overall cost of your loan. Most private lenders offer these types of repayment plans:
Every lender has different eligibility requirements for student loans, but generally you’ll need to:
Yes; once you start repaying your student loans, you can deduct the interest each year. At the beginning of the tax season, look for Form 1098-E in the mail or in your online loan account. The form will tell you how much interest you’ve paid on your student loans during the tax year.
Eligible borrowers can deduct up to $2,500 of the interest paid in the past year on a qualified student loan. A deduction lowers the amount of your income that’s taxable. So if you earn $30,000 a year and you can deduct the full amount, only $27,500 of your income will be taxed.
For tax year 2019, the deduction is available to filers who earn up to $85,000 (or $170,000 if you file a joint return), but it's gradually phased out if your modified adjusted gross income is between $70,000 and $85,000 (between $140,000 and $170,000 for joint filers).
Yes, some private lenders are willing to work with borrowers with less-than-stellar credit, although interest rates may be higher and loan amounts may be smaller.
Ascent, for example, says that it can base its lending decision on alternative factors. These may include your school, graduation date, major and cost of attendance. Check for credit score requirements at each lender. Some allow you to do prequalification, which allows you to see if you qualify and the potential rates you’ll receive without hurting your credit.