Private Student loans originate with a bank, credit union, or internet lender, as opposed to federal student loans, which are handled by the federal government.
You can pay for education with both federal and private loans, but federal loans are usually the best option. They frequently come with more favorable terms, such as lower interest rates, flexible repayment options, and loan forgiveness.
Private student loans may still be a viable option if:
- You’ve already completed the Free Application for Government Student Aid, or FAFSA, to determine your eligibility for government scholarships and work-study programs.
- You’ve already borrowed the maximum amount of federal student loans, both subsidized and unsubsidized.
- You have strong credit (score of 690 or higher) or a co-signer who does. Most private student loan applicants have a co-signer.
- You only borrow what you can repay.
Get tailored rates and discover themoneymail’s top-rated private student loan providers for students, parents, independent students, international students, part-time students, and graduate school.
1. College Ave (Best For International Students)
Pros:
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Loans are available for international students, community college students, and those pursuing career training.
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Low starting interest rates.
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There is a multi-year loan option.
Cons
- There are no transparent eligibility conditions.
- High rate caps.
- Undergraduates have a short six-month grace period.
Borrowers must be United States citizens or permanent residents. International students must have a U.S. social security number and a competent co-signer. College Ave does not specify credit or income restrictions, but students must maintain satisfactory academic progress while attending school. Students may enroll full-time, part-time, or less than half-time.
College Ave may levy a late fee, although it does not specify the amount.
2. Earnest (Best For Applying Without A Co-signer)
Pros
- No co-signer is necessary.
- Nine-month grace period.
- Skip one payment every year.
Cons
- A minimum credit score of 650 and an income of $35,000 are necessary.
- There is no co-signer release option.
- Loans are not available to citizens of Nevada.
Borrowers and cosigners must be US citizens or permanent residents above the age of majority. Undergraduate students must be enrolled at least half-time, although graduate students may enroll less than half-time.
Borrowers or co-signers must have a FICO score of at least 650, three years of credit history, a minimum income of $35,000, and a track record of timely payments. Both the primary borrower and the cosigner’s credit reports must be free of bankruptcy and collection accounts.
Earnest imposes a $8 returned payment fee plus a Florida stamp tax of 0.35 percent.
3. SoFi (Best For Online Borrowers Resources)
Pros
- Unemployment protection scheme.
- Mobile app is now available.
- Member advantages and rate savings.
Cons
- A brief six-month grace period.
- The eligibility requirements are vague.
- The maximum payback duration is 15 years.
Each borrower must be a United States citizen, permanent resident, or visa holder. Borrowers and co-signers must be employed or have adequate income from other sources. Students applying for loans must be enrolled at least half-time in a degree-granting program at an accredited institution. Associate degree candidates are ineligible.
SoFi doesn’t charge any fees.
4. Discover Bank (Best private student loan)
Why we picked it
Discover is our top pick for the best student loans due to its affordable interest rates, big loan amounts, and flexible payback schedules. With a Discover loan, you can borrow up to your school’s certified cost of attendance at either a fixed or variable interest rate.
Discover provides repayment terms of up to 20 years, depending on the type of loan, as well as deferment and forbearance options (which allow you to postpone repayment) if you return to school or experience financial difficulties. This online bank also does not charge any costs for student loans, so you won’t have to worry about application, origination, or late charges.
If you qualify for Discover’s multi-year option and anticipate needing additional funds in later years of school, your application process will be expedited. Students with a 3.0 GPA or better can receive a monetary reward of 1% of their loan amount.
Even though Discover student loans have a lot of tempting benefits, there are a few drawbacks. For example, Discover does not publish its credit or income requirements. Second, Discover does not have a cosigner release option, so your cosigner will remain on the loan until you have fully repaid it (or refinanced).
Pros
- There are no fees
- Deferral and forbearance alternatives
- 1% cash incentive for good grades.
- Can borrow up to the cost of attendance.
Cons
- Minimum credit score is not provided.
- Income requirement is not specified.
- There is no option for cosigner release.
Who should consider it?
A Discover student loan may be a good fit for you if you want flexible repayment options and the possibility of receiving cash back. However, if you desire the option of releasing the cosigner, it may not be the best solution.
5. Rhode Island Student Loan Authority (Best for competitive fixed rates)
Why we picked it
Although RISLA is a Rhode Island-based non-profit, it offers student loans in all 50 states and the District of Columbia. You can borrow up to $50,000 per year with multi-year approval, allowing you to renew your student loan application over time.
RISLA provides fixed interest rates on its student loans and does not impose application, origination, insufficient funds, or late fees. It also provides a federal loan-like income-based repayment plan for debtors experiencing financial hardship, as well as forbearance possibilities.
Rhode Island students and nurses may also be eligible for RISLA’s Nursing Reward or Internship Reward program. The nursing program waives interest on your loan for up to four years, while the internship program provides $2,000 in student loan forgiveness.
To be eligible for a RISLA loan, you or your cosigner must have a credit score of 680 and an annual income of $40,000 or more. After 24 months of continuous on-time payments, you may be able to discharge your cosigner from the loan.
Pros
- Competitive fixed rates.
- Income-based repayment options
- Rewards for qualified nurses and interns
- Option for cosigner release.
Cons
- Not offered to international students.
- To qualify, your credit must be good.
Who should consider it?
A RISLA student loan may be right for you if you want stable rates, need an income-based repayment option, or are eligible for the Nursing Reward or Internship Reward program.
6. Ascent (Best for no-cosigner loans)
Why we picked it
Ascent provides both cosigned and non-cosigned student loan alternatives with repayment durations ranging from five to twenty years. Its non-cosigned, outcomes-based loan is offered to juniors and seniors with a GPA of at least 3.0 and other qualifying criteria.
If you borrow an Ascent student loan with a cosigner, you can ask for a cosigner release after just 12 months of timely payments. Ascent does not impose application, origination, or disbursement costs and provides a nine-month grace period.
You can also choose a progressive repayment plan, which starts with smaller payments and gradually increases over time. However, keep in mind that if you miss your payment due date, Ascent will charge you late fees.
Although Ascent does not disclose its minimum credit score criteria, it does provide a minimum annual income of $24,000.
Pros
- Cosigned and non-cosigned loans are offered with a 9-month grace period.
- Cosigner release option after 12 months
- Repayment plan: progressive
- Can borrow up to the cost of attendance.
Cons
- Minimum credit score is not provided.
- Charges late fees.
- Non-cosigned loans are only accessible to juniors and seniors.
Who should consider it?
If you desire a non-cosigned student loan or a progressive repayment plan, Ascent may be a good fit.
7. Citizens Bank (Best for current Citizens customers)
Why we picked it
Citizens Bank offers student loans with fixed and variable interest rates and repayment lengths ranging from five to fifteen years. Qualifying borrowers can choose multi-year approval, making it easier to borrow additional citizen loans in the following years of study.
Citizens may be a suitable choice if you currently have a Citizens banking account, as it provides a 0.25 percentage point loyalty discount on your loan’s interest rate. Furthermore, if you are experiencing financial difficulties, you can request up to 12 months of deferment on your student loans. You can also apply to release your cosigner after 36 months of on-time payments.
Pros
- Multiple-year approval program
- Discounted interest rates for citizen consumers.
- A low-income requirement of $12,000 per year
Cons
- Minimum credit score is not provided.
- You must make prompt and full payments for 36 months before applying for cosigner release.
Who should consider it?
Consider a Citizens student loan if you currently have a Citizens account, want the option of multi-year approval, or are an international student (with a citizen or permanent resident cosigner).
7. Education Loan Finance (Best for customer support)
Why we picked it
ELFI offers student loans to applicants with credit scores of at least 680 and annual earnings of $35,000 or higher. You can borrow up to your school’s cost of attendance and choose repayment terms ranging from five to fifteen years.
ELFI student loans include a six-month grace period and are available in either fixed or variable rates.
ELFI is a service-oriented lender. If you apply through ELFI, you will be allocated a lender-employed advisor who will walk you through the process and answer your questions along the way. There are five ways to contact them: email, online chat, mail, phone, and fax, and the customer care team is available on weekends.
Pros
- Accessible and highly rated customer service
- A student loan expert can help you apply.
- Can borrow up to the cost of attendance.
Cons
- No cosigner release.
- To qualify, your credit must be good.
- Not offered to international students.
Who should consider it?
ELFI may be an excellent option if customer service is important to you and you meet the credit and income standards.
8. Iowa Student Loan (Best for parent borrowers)
Why we picked it
Despite its state-specific moniker, ISL Education Lending offers student loans nationwide, even to parent borrowers. It also provides cosigned and non-cosigned loans to Iowa and Illinois students through the Illinois Partnership Loan Program.
Parents may appreciate ISL’s College Family Loans, which have set rates and a deferred repayment option. The ISL education loan requires a minimum credit score of 660.
Pros
- Can borrow up to the cost of attendance.
- Specialized loans are available for Iowa and Illinois students.
- Parent loans offer reasonable fixed rates and deferred payment options.
Cons
- Not available in Maine.
- No-cosigner loans are exclusively available for Iowa and Illinois students.
Who should consider it?
Parents who want to help fund their children’s educational expenses may be interested in ISL’s College and Family Loan. Students in Illinois and Iowa have access to specific student loan choices.
9. Sallie Mae (Best for part-time students)
Why we picked it
Sallie Mae provides a variety of student loan alternatives, including undergraduate, graduate, job training, and trade school loans. Part-time students who attend school for less than half-time are also eligible.
You can choose between 10- and 15-year loan durations, as well as fixed or variable interest rates. Students applying with a cosigner may benefit from Sallie Mae’s rapid path to cosigner discharge, which requires only 12 months of on-time payments.
Pros
- Cosigners can be released after 12 months.
- Training and trade school loans are also available.
- Loans for part-time students are available
Cons
- Credit and income requirements are not stated.
- Charges late fees.
Who should consider it?
A Sallie Mae student loan may be an excellent option for students seeking a quick path to cosigner discharge, as well as those enrolling part-time or pursuing vocational training or trade school programs.
The Bankrate Guide to Selecting the Best Private Student Loans
When searching for a student loan, seek a competitive interest rate, flexible repayment periods that match your needs, extensive hardship choices, and low fees.
The top lenders listed below were chosen based on several criteria, including APR, loan amounts, fees, credit standards, and broad availability. To learn more about how we choose lenders, please see our methodology at the bottom of the page.
Compare private student loan interest rates
| Lender | Best For | Min. Credit Score | APR | Min. Loan Amount | Max Loan Amount |
|---|---|---|---|---|---|
| College Ave | International students not | t specified | 5.59%-16.65% variable; 4.11%-15.44% fixed | $1,000 | 100% total cost of attendance ($150,000 for some degrees) |
| Custom Choice | Graduation rewards not | t specified | 5.40% – 15.22% variable; 4.43% – 14.66% fixed (with autopay) | $1,000 | $99,999 annually; $180,000 aggregate |
| Earnest | Applying without a co-signer | 650 | 5.62%-16.20% variable; 4.42%-15.90% fixed | $1,000 | 100% total cost of attendance Sallie Sallie |
| e Mae | Part-time students not | t specified | 6.37%-16.70% variable; 4.50%-15.49% fixed | $1,000 | 100% total cost of attendance of online |
| ne borrower resources | 640 | 5.99%-14.70% variable; 4.44%-14.70% fixed | $1,000 | 100% total cost of attendance |
What is a private student loan, and how do they work?
A private student loan is a loan used to pay for qualified educational expenditures. Private student loans are available from banks, online lenders, credit unions, and, in some cases, institutions and state agencies. These often have higher borrowing limits than federal student loans and may provide lower interest rates to applicants with good credit, but they provide fewer borrower protections.
To qualify, you must meet the lender’s eligibility standards and undergo a credit check. Applicants with good or exceptional credit often receive the lowest interest rates, but because undergraduates do not have significant credit histories, they typically require a cosigner to obtain a private student loan.
Some lenders specialize in undergraduate student loans that do not require a cosigner. To decide your eligibility and rate, they may consider your academic performance, earning potential, employment history, and other factors.
Types of private student loans
A private student loan is available to students of all levels, including undergraduates and graduate students pursuing medical, business, dental, and legal degrees.
Some lenders also provide private student loans to international students or those in residency programs, studying abroad, attending community college, enrolled in a career-training institution, or studying for the bar test. There are even student loans available for students with poor credit or a limited financial history, though these loans may be more expensive.
Pros and cons of private student loans
Before applying for a private student loan, evaluate the benefits and pitfalls.
Pros
- High borrowing limits: Private loans typically have higher borrowing limitations than federal loans, with some paying the full cost of enrollment.
- Low-interest rates: Borrowers with good credit may be eligible for lower interest rates than those available through federal student loans.
- Flexible enrollment requirements: To qualify for federal student loans, you must be enrolled at least half-time. However, some private lenders give loans to applicants who are only taking a few classes or attending summer school.
- Choice between fixed and variable rates: You can personalize your repayment by selecting between a fixed or variable interest rate.
Cons
- No federal protections or benefits: Benefits of federal student loans include standardized forbearance and income-driven repayment programs. Private lenders have fewer options accessible.
- Average credit required: While most federal student loans do not require credit checks, a credit score in the mid-600s is typically required to qualify for a private student loan.
- High rates for borrowers with poor credit: The worse your credit score, the greater your interest rate on private student loans. If your credit score is near the lender’s minimum, your interest rate could be in the double digits.
What can private student loans be used for?
While the restrictions vary by lender, private student loans can generally be used 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 once you’ve applied for a private student loan?
Once you’ve applied for a student loan and been approved, your lender will contact your school to confirm the cost of attendance. The certification procedure may take many weeks. At that point, monies will be disbursed to your school for tuition and fees, and any remaining balance will be returned to you.
In most cases, you will not have to worry about repaying your student loan until after your grace period has expired. The normal grace period is six months following graduation or dropping below half-time enrollment, but it may be longer with some private lenders. At that moment, you will be liable for repaying both the principal and interest.
Many private companies provide a payment plan while you are in school to reduce the amount of interest accumulated. Once your funds are issued, you may be able to make interest-only installments or a small flat monthly payment.
How are private student loans different from federal student loans?
While both private and federal student loans are legitimate methods to pay for college, there are significant differences to consider.
| Federal student loans | Private student loans where | |
|---|---|---|
| e do they come from? | The U.S. Department of Education | Banks, credit unions, online lenders |
| How much can you borrow? | Up to $31,000 for dependent undergraduates, up to $57,500 for independent undergraduates, and up to the entire cost of tuition for graduates. | s by a lender; often up to the full cost of attendance |
| What are the interest rates? | 5.50% for undergraduates, 7.05% or 8.05% for graduates; all fixed rates | 4.49% to 16.99%; may be fixed or variable |
| What are the benefits? | Income-based repayment plans, loan forgiveness possibilities, extended deferment, and forbearance | Low interest rates for customers with good credit, potential discounts and prizes, and higher loan amounts. |
| What are the drawbacks? | Limited loan amounts for undergraduates, with only one interest rate option. | Credit checks are necessary, and consumers with weak credit face exorbitant interest rates. |
How do student loan interest rates work?
Most private student loans have two interest rates: variable and fixed. A fixed interest rate does not vary over the term of the loan. Borrowers who prefer regular payments may prefer fixed rates, albeit they often start slightly higher.
Variable rates, on the other hand, are based on changes in an index, such as the Libor or SOFR. These rates may rise or fall throughout repayment, but lenders often limit how high the rate can go.
Every month, your statement contains a portion of the principal (the loan amount you borrowed) and interest costs. While your monthly payment will remain constant if you have a fixed interest rate, more and more of each payment will go toward the principal and less toward interest with each passing month.
You can use a student loan calculator to see how different interest rates affect your monthly payment over time.
Private student loans for different borrowers
Private lenders frequently tailor loans to certain sorts of borrowers, with varying rates, terms, and eligibility conditions.
| Type of borrower | What to know undergraduate |
|---|---|
|
undergraduate student
|
You may be needed to apply with a cosigner.
|
|
Graduate students
|
you may qualify on your own if you fulfill credit standards; other lenders have loans for specific programs, such as MBA, law, and medical school loans.
|
|
International student many
|
many lenders require international students to apply with a cosigner who is a U.S. citizen or permanent resident, while there may be a no-cosigner loan with lenders like MPower Financing and Prodigy Finance.
|
|
Enrolled part-time
|
look for a lender, like as Sallie Mae, that permits you to enroll half-time or less.
|
|
Parent
|
These loans are for parents of students and may have higher interest rates and/or require prompt payback. What about income-sharing agreements?
|
Income-share arrangements, like student loans, let you pay for your education. Instead of repaying the amount borrowed over a set period, you will agree to pay a percentage of your future income for a defined period after you graduate from school.
How to choose the right student loan for you
Before you begin shopping for the best private student loans for college, you should first identify what you are looking for. Consider how much you need to borrow, what monthly payment you can afford, and which repayment options fit your budget. You can use an online student loan calculator, such as Calculator.net, to crunch the figures.
Once you’ve determined your ideal loan, shop around with many lenders to discover an offer that meets your needs. Some lenders allow you to prequalify for a loan online, allowing you to compare rates without any obligation or influence on your credit score. When comparing loan offers, search for loans with a competitive interest rate, flexible repayment options, and a fair monthly cost.
Other variables to consider while making your decision include cosigner release options, forbearance programs, and customer service.
How to apply for a student loan
To apply for a federal student loan, complete the Free Application for Federal Student Aid (FAFSA) at StudentAid.gov. However, the process of applying for a private student loan differs.
There is no unified application for private loans, therefore you must apply with each lender individually. As previously said, certain lenders allow you to check your rates through prequalification online, which can help you pick the best student loan for you.
When you locate an offer you like, you’ll fill out an official application with your personal and financial information, as well as your cosigner’s information, if appropriate. The lender may ask you to upload some verification documents, such as pay stubs or proof of address.
If the lender approves your loan application, it will contact your school to verify your cost of attendance. The lender will then transfer the money to your financial aid office, which will apply them to your tuition bill.
Once the financial administrator has paid your tuition and fees, they will send you any remaining cash, which you can spend for books, food, and other living expenses. (You can also return any surplus dollars directly to your lender, which will help with your payback.)
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