What is a private student loan?
Private student loans are typically issued by a bank or financial institution, (as opposed to federal student loans, which are offered by the government).
Types of private student loans
There are private student loans for students in undergraduate, graduate, certificate, dental, medical, and health profession programs. Sallie Mae also offers private student loans for graduates studying for the bar exam, or relocating for medical and dental residencies.
What can private college loans be used for?
Whether you're studying online or on campus, private school loans—as well as federal student loans—for college and grad school can be used to pay for your education expenses, which for full-time and half-time students may include:
Tuition
Room and board
Fees
Books
Supplies
Transportation
Computer for school
Borrow what you need for the entire school year. Apply only once with a single credit check and funds will be sent directly to your college or university to cover each term as requested. You can cancel future disbursements as needed with no penalty. No additional interest is charged until money is sent to your school.
Who is eligible for private student loans?
Federal and private student loans use different eligibility criteria.
Federal student loans are offered by the government. You can fill out the FAFSA to determine eligibility.
For Subsidized Loans, the US Department of Education pays the interest while the student is in school at least half time, grace (if offered) and authorized deferment periods.
For Unsubsidized Loans, the borrower is responsible for paying interest during the in-school or grace periods, or a post-school deferment.
Private student loans, offered by banks and financial institutions, are based on your creditworthiness. Your credit—and your cosigner’s credit—are evaluated, along with other information provided on your application. Applying for a private student loan with a creditworthy cosigner may increase your chances for approval and may help get you a better rate.
You should generally consider federal student loans first, and then take out a private student loan if you still need money for college.
How to look for private loans for college
There are differences between private loans for college. It’s important to find a reputable student loan lender; here are some ways to find the right one:
Start with your school to see if they offer a lender list.
Confirm that the lender works with your school of choice.
Ask others for recommendations on lenders they've used for their student loans.
Make sure you’re looking at the right private student loan for your education. There may be different loans for undergraduate, graduate, continuing education, or certificate courses.
How to compare private student loans
Once you’ve found a couple of lenders, you can compare their private student loan options to see what each offers:
What is the interest rate range?
Can you choose a variable or fixed interest rate?
Are there student loan fees, like an origination fee?
Is there a choice of in-school repayment options (fixed, interest only, or deferred)?
Are there benefits that help you lower your interest rate?
Is there a program that lets you make more manageable payments (like interest only) for a period of time after you graduate?
Do you have access to your FICO® Credit Score?
Are there other benefits that make the private loan for college valuable?
Is the company reputable, with many years of experience?
Applying for private student loans
You can apply for private college loans directly from each lender’s website. You should apply after you’ve made your school decision and once you know how much you need to borrow, so you won’t have to submit separate student loan applications for schools you’re considering.
How to get a private student loan for college
There's typically no cost to apply for private student loans, but there are a few things you should know before you start:
You’ll fill out basic personal information and financial information.
You’ll be asked to choose the interest rate type and repayment option for your loan.
You generally can apply with a creditworthy cosigner during the application process. If you apply with a cosigner, they’ll have to supply their financial information in the student loan application.
Our private student loan application process only takes about 15 minutes to receive a credit result.
Understand the student loan application process
How much should you borrow for in private student loans?
In terms of how much you should take out for college, borrow only what you think you can afford to pay back later. Think about your future career and how much you may make in your chosen field. To help estimate your future income potential, you can visit the US Department of Labor at bls.gov.
How much can you borrow in private student loans?
The amount of money you can receive from a private education loan varies by lender. If your lender requires “school certification,” your school verifies your enrollment and ensures that you’re not borrowing more than the cost of attendance (including your federal student loans, scholarships, and grants).
Do you need a good credit history for private student loans
Private loans for students are credit-based. That means that a lender will look at your history of borrowing money and paying it back. Federal student loans, on the other hand, are generally based on financial situation and federal guidelines rather than credit. (Note: A credit check is conducted for the Federal PLUS Loan.)
If you don’t have a credit history, you may need a cosigner. A cosigner can be a parent, relative, or any other creditworthy individual. Their good credit history may help you get a private student loan.
Along with you, a cosigner accepts responsibility for repaying your private student loan. If you keep your loan in good standing, making on-time payments, it can be a great way to build your own credit. If you fall behind or don’t pay back your loan, your cosigner’s credit can suffer if they don’t make payments.
What happens after you apply for a private student loan?
After you apply for our private education loans for college or grad school, you’ll typically get a credit decision within 15 minutes of applying. Once approved, you'll also get notices to review, accept, and e-sign your loan terms.
Your school will have to certify your loan amount before it can be disbursed (paid to the school). Then you’ll get a Final Disclosure spelling out the details.
You have the right to cancel your private student loan as described in the Final Disclosure before it’s disbursed (sent) to your school.
Learn what happens after your loan is approved
Managing your private student loans
Starting with your first semester, it’ll be helpful to keep track of both your federal and private student loans. Here are some tips for managing student loans and debt:
You may apply for a new loan every year that you’re a student.
You may need to be enrolled in school at least half-time.
Interest accrues on your student loan throughout the life of the loan. Making in-school payments may lower the total cost of your loan.
Once you leave school, whether you graduate or not, you’ll generally have a grace period of six months before you begin to make principal and interest payments.
As you continue to take out federal or private student loans throughout your years in college, keep a list of the lenders, how much you’re borrowing—and don’t forget to borrow responsibly.
Learn about managing your student loans
Questions? Need help applying?
Call us at
877-279-7172
footnote1. For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
footnoteSallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.
footnoteExplore federal loans and compare to make sure you understand the terms and features. Private student loans that have variable rates can go up over the life of the loan. Federal student loans are required by law to provide a range of flexible repayment options, including, but not limited to, income-based repayment and income-contingent repayment plans, and loan forgiveness and deferment benefits, which other student loans are not required to provide. Federal loans generally have origination fees, but are available to students regardless of income.
footnoteFederal student loan information was gathered on March 1, 2023 from studentaid.ed.gov.
footnoteSallie Mae provides compensation to its partners for their referral of student loan customers.
HomeUnderstand AidTypes of Financial AidLoansFederal Versus Private Loans
When it comes to paying for college, career school, or graduate school, federal student loans can offer several advantages over private student loans.
Need a loan to help pay for college? Consider federal loans first!
If you apply for financial aid, your school will likely include student loans as part of your financial aid package. It’s important to understand what types of loans you are offered. Generally, there are two types of student loans—federal and private.
Federal student loans and federal parent loans: These loans are funded by the federal government.
Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.
If you need to borrow money to pay for college or career school, start with federal loans.
Federal student loans are
Direct Subsidized Loans and Direct Unsubsidized Loans and
Direct PLUS Loans (for graduate and professional students).
Federal parent loans are
Direct PLUS Loans (for parents). Parents are fully responsible for paying these loans, even though they are taken out to benefit students.
What are the differences between federal and private student loans?
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
In contrast, private loans are made by private organizations such banks, credit unions, and state-based or state-affiliated organizations, and have terms and conditions that are set by the lender. Private student loans are generally more expensive than federal student loans.
The chart below provides a summary of the differences.
Subject
Federal Student Loans
Federal Parent Loans
Private Student Loans*
When payments become due
Payments aren’t due until after you graduate, leave school, or change your enrollment status to less than half-time.
You (the parent) can choose to put off payments until the student you borrowed for graduates, leaves school, or changes enrollment status to less than half-time.
Many private student loans require payments while you are still in school, but some do allow you to defer (put off) payments while in school.
Interest rates
The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student loans.
The interest rate is fixed and may be lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student and parent loans.
Private student loans can have variable or fixed interest rates, which may be higher or lower than the rates on federal loans depending on your circumstances.
Subsidies
If you have financial need, you may qualify for a loan for which the government pays the interest while you’re in school on at least a half-time basis and during certain other periods. This type of loan is called a "subsidized loan."
These loans are not subsidized; therefore, you will be responsible for all the interest on your loans.
Private student loans are often not subsidized. In the case of an unsubsidized loan, you will be responsible for all the interest on your loan.
Credit check
You don’t need to get a credit check to qualify for federal student loans (except for PLUS loans). For PLUS loans, we will check your credit before determining whether you are eligible. Learn how someone with an adverse credit history may qualify for a PLUS loan.
We will check your credit before determining whether you are eligible. Learn how someone with an adverse credit history may qualify for a PLUS loan.
Private student loans often require an established credit record or a cosigner.
Tax benefits
Interest may be tax deductible.
Interest may be tax deductible.
Interest may be tax deductible.
Consolidation and refinancing
Loans can be consolidated into a Direct Consolidation Loan. Learn about your consolidation options.
Loans can be consolidated into a Direct Consolidation Loan. Learn about your consolidation options.
Private student loans cannot be consolidated into a Direct Consolidation Loan but may be refinanced.
Postponement options
If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments.
If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments.
You should check with your lender to find out about options for postponing or lowering your loan payments.
Repayment plans
There are several repayment plans, including an option to tie your monthly payment to your income.
There are several repayment plans, including an option to tie your monthly payment to your income.
You should check with your lender to find out about your repayment options.
Prepayment penalties
There is no prepayment penalty fee.
There is no prepayment penalty fee.
You need to make sure there are no prepayment penalty fees.
Loan forgiveness
You may be eligible to have some portion of your loans forgiven if you work in public service. Learn about our loan forgiveness programs.
You may be eligible to have some portion of your loans forgiven if you work in public service. Learn about our loan forgiveness programs.
Although many private lenders do not offer loan forgiveness programs, some student loans from state agencies can be forgiven in certain circumstances.
Where to get help
Contact your loan servicer first. If you have difficulty with your loan servicer, send us feedback.
Contact your loan servicer first. If you have difficulty with your loan servicer, send us feedback.
Contact your loan servicer first. If you have difficulty with your loan servicer, contact the Consumer Financial Protection Bureau for assistance
*Private loans differ by lender and by type of loan. Be sure you understand the terms of your loan, and keep in touch with your lender about any questions you may have.
How do I get a federal student loan?
To get a federal loan, you must first complete the Free Application for Federal Student Aid (FAFSA®) form. Learn more about applying for aid.
Additional
What to know about private student loan forgiveness and how to save money on your private student loans. (Shutterstock)
Private student loans make up just about 7.6% of the trillion-dollar student loan market, according to data exchange platform MeasureOne. But private student loan borrowers carry a total $123 billion-plus share of Americans’ total student loan debt.
The broad student loan forgiveness which President Joe Biden announced on Aug. 24 doesn’t apply to private student loans. Private lenders fund them, not the federal government.
If you have private student loans, you can take steps that could help you manage your payments, lower their cost and pay them off faster — including refinancing.
With Credible, you can easily compare student loan refinancing rates from multiple lenders in minutes.
Can you get private student loan forgiveness?
Can bankruptcy cancel private student loan debt?
Could President Biden forgive private student loans?
Alternative to private student loan forgiveness
Can you get private student loan forgiveness?
Government and independent student loan forgiveness programs don’t apply to private student loans. Only federal student loans can be forgiven.
However, your private student loan lender may offer some kind of relief for borrowers in financial distress. You may be able to contact your lender and request a payment pause, or a lower interest rate or payment amount. But these measures will be temporary, and interest will continue to accrue during the relief period.
WHAT BIDEN’S LOAN FORGIVENESS REALLY MEANS FOR MANY STUDENT LOAN BORROWERS
Can bankruptcy cancel private student loan debt?
Federal student loans can’t be discharged through bankruptcy. Private student loan debt can, although the process can be more difficult than discharging other types of debt, like credit card debt.
Some types of private student loans may require borrowers who file for bankruptcy to demonstrate extreme financial hardship and go through an extra step known as an adversary proceeding, according to the Consumer Financial Protection Bureau. Certain education loans are treated like other types of unsecured loans. The CFPB says these include:
Loans paid directly to the borrower for an amount higher than the total cost of tuition, books, and room and board
Loans to attend unaccredited colleges, schools outside the U.S., unaccredited training and trade certificate programs, and other educational institutions that aren’t eligible for Title IV funding
Loans taken to cover fees and living expenses while the borrower studies for the bar or other professional exam
Loans taken by borrowers who attended school less than half-time
Bankruptcy should be a last resort
If you’re struggling financially, bankruptcy can look like an appealing solution. But it’s important to remember that bankruptcy is a legal process with far-reaching and lasting negative consequences.
Bankruptcy can appear on your credit report for seven to 10 years after it’s settled in the courts, depending on the type of bankruptcy. In addition to its immediate negative effect on your credit score, bankruptcy can make it difficult to secure new credit, or secure credit at favorable rates and terms, while it’s still present on your credit report.
STUDENT LOAN REFINANCE VS. CONSOLIDATION: WHAT’S THE DIFFERENCE?
Could President Biden forgive private student loans?
It’s highly unlikely, and perhaps even impossible, for the federal government to broadly forgive private student loan debt. Banks, credit unions, online lenders and other private financial institutions issue private student loans — not the Department of Education.
The Department of Education was set to extend $10,000 in student loan forgiveness to individual federal student loan borrowers making $125,000 or less ($250,000 or less for households). Qualifying borrowers who also received federal Pell Grants were to get up to $10,000 more, for a total of $20,000 in forgiveness. However, several lawsuits arose, with two of them blocking the program from being enacted. About 16 million borrowers had already applied and been approved for forgiveness.
Oral arguments were made before the Supreme Court on Feb. 28, but a final decision won’t be made until June.
BIDEN ADMINISTRATION UNVEILS DEFENSE OF STUDENT LOAN FORGIVENESS PLAN
Alternative to private student loan forgiveness
Defaulting on student loans can have serious consequences for your credit and finances. If you’re struggling to repay your private student loans, the only way to permanently change your rate and terms to something more manageable is through student loan refinancing.
Refinancing your student loans may be an option for you
There are multiple benefits to refinance, including:
The ability to streamline your payments by consolidating multiple student loans into one.
The opportunity to get a lower interest rate that will save you money over the life of the new loan, especially if your credit has improved since you first took out the loan.
The ability to lower your monthly payment by extending your repayment period (although this will likely mean a higher total interest cost).
The chance to pay off your loan sooner by refinancing into a shorter repayment term. You’ll save on interest in the long run, although your monthly payments will likely be higher.
If you’re planning on refinancing your student loans, it’s important to consider options from more than one lender. Credible makes it easy to compare student loan refinance rates from multiple lenders in minutes, and it won’t affect your credit score.
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Private Student Loans for College
Home > Students & Debt > Types of Student Loans > Private Student Loans for College
Private loans for college are fraught with negatives, including high interest rates and unforgiving repayment schedules that often end in lawsuits for many borrowers. Unlike government student loans that typically come with low interest rates and generous repayment terms, private loans require high credit scores to qualify and rigorous payment plans that have a nasty reputation for producing defaults. They’re the student loans of last resort, the ones college students turn to when all the family aid, grants, scholarships and federal loans aren’t enough to cover academic expenses.
Nevertheless, they remain an important part of the college-funding pipeline, with $108 billion in outstanding debt, yet are small compared to the nation’s $1.4 trillion federal student debt market. Sometimes called alternative education loans, they’ve been associated with predatory lenders and for-profit colleges that prey on borrowers’ desire for higher education.
Not all private loans fit the profile. Banks offer private loans and are reputable lenders. But other non-bank operators have given this form of lending a well-deserved reputation for greed and abuse. In most cases, these are loans you should consider only after you’ve exhausted borrowing options with more lenient terms, such as federally funded Stafford, Perkins and PLUS loans.
If you decide you need a private loan, remember the adage “buyer beware.”
Basic Private Student Loans
Private student loans aren’t backed by the government and come with stricter qualifying requirements, among them a solid credit score. They aren’t issued based on financial need, but on the applicant’s creditworthiness. This means you do not need to complete a Free Application for Federal Student Aid (FAFSA) or any other federal applications, but you likely will have to document your ability to repay the lender.
Though it’s not required, experts suggest you complete the FAFSA anyway. Completing it will tell you if you are eligible for better financial aid options such as grants, federal loans and work-study.
Loan offers can vary dramatically, so explore all options carefully. If you don’t have a credit history, you will need a cosigner to qualify. You should carefully review the loan terms and go over them with your designated cosigner, since that person will be liable for the debt if you are unable or unwilling to repay it. Lenders’ terms vary, differing on payment deferment options, interest rates, repayment plans and loan limits. And unlike federal loans, private loans often come with variable interest rates, which means you’ll monthly payment can change during the life of the loan.
A variety of lenders make private student loans, including:
Commercial Banks
Credit Unions
Community Banks
Online lenders
Sallie Mae (a large private lender)
Picking the right lender requires care. Be ready to ask questions about how large a loan business the lender has and how variable interest rates are computed. Also Google the lender and check government web sites to see if the lender has received complaints or has been sued.
Other steps to consider:
Check with your college or university to see if it offers a list of recommended lenders
Confirm that the lender works with your school
Talk to others – especially fellow students and graduates – for recommendations
Understand the loan and confirm that it is the right one for the academic program you’re entering. Different programs can have different loans available.
You should also consider how much you’re willing to borrow from a private lender. Different degree programs require widely varying amounts of time to complete, and graduates can earn substantially different incomes. Understand your program and your income potential before taking on debt. The College Board recommends that your monthly loan payments not exceed 10% to 15% of your starting monthly salary.
Private Loan Uses
Like federal loans, private loans can be used for many purposes, but remember student loans are designed to pay for academic expense, not entertainment.
Here are the sorts of things they’re designed to cover:
Tuition
Room and board
Academic fees
Books, supplies, computers and electronics, and classroom equipment
Personal needs and transportation
Borrowed money shouldn’t be spent on vacations, concert tickets, streaming audio and video accounts or anything else that’s not directly related to your studies.
Comparing Private Loans
Assembling a group of potential lenders is just the first step in deciding where to borrow. Once you have the candidates lined up, compare the options to decide which loan will work best for you.
Some important things to consider:
What are the private loans’ interest rates? Is it a variable rate loan or a fixed one, like federal loans? If it is variable, how does it change and does it have a cap?
Are you required to begin repaying the loan while you’re still in school? If so, how much will you need to pay? Will you just repay interest while enrolled or interest and principal?
Are there any steps you can take to lower your interest rate during the repayment period?
What can you learn about the lender? If the lender reputable and how long has it been in the student-loan business?
Payment Deferment
Many lenders allow you to defer all payments until after you’re done with school. Some even provide you with a grace period of 6-9 months, meaning you won’t have to begin repaying your loan until after you’ve been out of school for a while.
Other lenders may require you to make some payments while you’re still in school. You may have to pay interest only each month, or you may have to start repaying the principal amount immediately after finishing school. Again, it’s important to understand your obligations before borrowing.
Interest Rates
Most private student loans have interest rates tied to the economy using LIBOR or PRIME, two widely used interest-rate indexes.
LIBOR, the acronym for the London Interbank Offered Rate, tracks what it costs banks to borrow money from other banks. It represents the recent average interest rate earned by deposits in the London market.
The PRIME index, short for Prime Lending Rate, reflects the lowest interest rates currently offered by banks.
The interest rate offered on an education loan will be close to one of the indexes. An interest rate of LIBOR plus 2.8% means your interest rate will be 2.8 percentage points greater than the LIBOR index. Currently, an interest rate of LIBOR + 2.8% is roughly equal to PRIME + 0.0 percent.
The best interest rates available are typically LIBOR + 2% and PRIME – 0.5%. It is usually better to have an interest rate tied to LIBOR. These rates typically grow more slowly than those tied to PRIME and could save you money in the long term.
Be aware that your interest rate may be introductory and may only last while you are in school and during a grace period. After that, you may be charged a higher interest rate.
Also look at the fees. A lower interest rate may mean higher fees.
Repayment Plans
Repayment terms vary by lender and may depend on the size of your loan. Most lenders have maximum repayment terms of 15 to 25 years. More time to repay a loan will lower your minimum monthly payments, but you’ll wind up paying more in interest.
It’s wise to begin paying off a private loan as soon as you can, even if the required repayment period hasn’t begun and you’re still in school. The faster you can lower the amount of principal you owe, the lower your interest payment will be on the remaining balance and the sooner you will get out of debt.
You can consolidate private student loans. Terms vary depending on your credit score, income and other variables.
Maximum Loan Amounts
Some lenders have maximum loan amounts cap your annual and total borrowing amounts, regardless of your actual costs. Lenders may cap undergraduate loans at or around $30,000 a year. Cumulative or total loan limits are usually around $120,000 or $150,000 for undergraduate studies. Graduate and professional students have higher limits.
Other lenders allow you to borrow up to the full cost of your education. If that’s the case, your college or university will estimate the annual cost of attendance, including tuition, living expenses and other financial need and you’ll be able to borrow up to that amount.
Specialized Private Student Loans
Federal student loans are not available for law and medical students after they graduate. These students can instead turn to private loans if they have more educational expenses.
A Bar Study Loan is awarded to law students to help pay for bar exam costs and living expenses while studying for the exam.
A Residency and Relocation Loan is designed to help medical and dental students pay for costs while they look for a residency and relocate.
Student Loans
5 Best Private Student Loans for May 2023
If you've exhausted all your scholarship, grant, work-study, and federal student loan options and still need money for school, private student loans can be a good option.
Full Introduction
Compare the best private student loan lenders
5.0
Rates (APR)
4.44% – 15.32%
Best Overall
View Rates
4.8
Rates (APR)
4.50% – 16.20%
Best for Cosigners
View Rates
4.3
Rates (APR)
4.45% – 16.20%
Best for No Fees
View Rates
4.7
Rates (APR)
4.62% – 15.66%
Best for
Forebearance Flexibility
View Rates
4.1
Rates (APR)
4.49% – 13.80%
Best for Customer Benefits
View Rates
Reviews of the five best private student loans
Check out the reviews below for an in-depth explanation as to why we selected each lender as one of the best private student loans. If you’re interested in learning more about a specific lender, you can jump to that review by clicking on its name in the list below.
Best overall: College Ave
Best for cosigners: Sallie Mae
Best for forebearance flexibility: Ascent
Best for member benefits: SoFi
Best for no fees: Earnest
College Ave
Our Pick: Best Overall
5.0
LendEDU Rating
View RatesDisclosures
Why It's One of the Best
College Ave is our choice as the best overall lender for the third year in a row because it has competitive rates, lets you choose your repayment term, and can cover up to 100% of your school-certified cost of attendance.
Variable Rates
4.99% - 15.32%2 APR
Fixed Rates
4.44% - 15.32%2 APR
Loan Amounts
$1,000 - 100% of school-certified cost of attendance1
Pros & Cons
Eligibility Requirements
Repayment Details
College Ave is an online student loan lender based out of Wilmington, Delaware. The lender’s sole focus is to make a college degree more attainable by helping students and parents afford the rising cost of higher education.
When you borrow with College Ave, you’ll get to take advantage of its Multi-Year Peace of Mind™. Thanks to this benefit, 90% of undergraduate borrowers are approved for additional loans for future years when applying with a cosigner.
That’s not the only benefit of College Ave. It also allows you to select your repayment term and explains how the term and plan you choose impacts the long-term cost of your loan.
Are you interested in applying for a loan with College Ave? You can get an instant credit decision in just three minutes by clicking here.
Sallie Mae
Our Pick: Best for Cosigners
4.8
LendEDU Rating
View RatesDisclosures
Why It's One of the Best
Sallie Mae is our choice as the best for cosigners due to its short cosigner release period. Borrowers can apply for a release of their cosigner from the loan after they graduate, make 12 on-time principal and interest payments, and meet certain credit requirements.1
Variable Rates
5.87% - 16.20% APR2
Fixed Rates
4.50% - 14.83% APR2
Loan Amounts
$1,000 - 100% of school-certified cost of attendance3
Pros & Cons
Eligibility Requirements
Repayment Details
Sallie Mae, the most widely known student loan lender, is based out of Newark, Delaware. When it was founded, it was a government entity in charge of servicing federal education loans. Then, between 1997 and 2004, Sallie Mae transitioned into a fully privatized bank and began offering private student loans.
Today, Sallie Mae controls the largest share of the private student loan market. It's also expanded its product offering to include credit cards, savings accounts, and more.
Sallie Mae borrowers can enjoy benefits including Multi-Year Advantage and no origination or application fees. With Multi-Year Advantage, 96% of undergraduate students who’ve been approved with a cosigner were approved again when they returned with a cosigner the following year.4
Are you interested in applying for a loan with Sallie Mae? You can apply and get a credit decision in about 15 minutes by clicking here.
Earnest
Our Pick: Best for No Fees
4.3
LendEDU Rating
View Rates
Why It’s One of the Best
When Earnest says it doesn't charge any fees, it means it. There are no origination, application, prepayment, or late payment fees.
Variable Rates
5.15% – 16.20% APR
Fixed Rates
4.45% – 14.90% APR
Loan Amounts
$1,000 – 100% of school-certified cost of attendance
Pros & Cons
Eligibility Requirements
Repayment Details
Earnest is an online lender based out of San Francisco, California. The lender was founded with the goal of making higher education accessible and affordable for everyone.
One of the main benefits of taking out a loan with Earnest is that there are no fees. Many lenders market their student loans as having no fees to apply, but this only refers to origination and application fees. With Earnest, you won't be charged any fees to apply, plus you won't be charged for paying off your loan early or for any late payments.
In addition to no fees, Earnest offers several other benefits, like a longer than average grace period and the ability to skip a payment once per year.
Are you interested in applying with Earnest? You can find out if you're eligible in just two minutes by clicking here.
Ascent
Our Pick: Best for Student Support
4.7
LendEDU Rating
View RatesDisclosures
Why It's One of the Best
Ascent doesn't just want to help students afford an education, it also wants to help them succeed in the classroom, and outside of it. With Ascent Connect, undergraduates gain access to exclusive student success coaching.
Variable Rates
6.16% – 15.49% APR
Fixed Rates
4.62% – 15.66% APR
Loan Amounts
$2,001 – $200,000
Pros & Cons
Eligibility Requirements
Repayment Details
Ascent is an online student loan lender based out of San Diego, California. Its student loan offering is unique compared to other lenders in that it offers three different options. These options include its traditional cosigned loan, non-cosigned credit-based loan, and non-cosigned future income-based loan.
Ascent's new Ascent Connect program was rolled out for the first time this year. It's currently available to a limited number of undergraduate applicants but has plans to expand in the future.
If accepted into the program, active undergraduate students will receive a dedicated Ascent Success Coach who can help them through college and their career search. The program comes with a free app that includes tools and resources for finding and launching a career, one-on-one coaching sessions, and scholarship opportunities.
Are you interested in applying with Ascent? You can prequalify and check your rate with no impact on your credit by clicking here.
SoFi
Our Pick: Best for Member Benefits
4.1
LendEDU Rating
View Rates
Why It’s One of the Best
SoFi members enjoy a wide range of benefits, including a 0.125% rate discount, career coaching, unemployment protection, and more.
Variable Rates
5.19% – 13.27% APR
Fixed Rates
4.49% – 13.80% APR
Loan Amounts
$5,000 – 100% of school-certified cost of attendance
Pros & Cons
Eligibility Requirements
Repayment Details
SoFi is a mobile-first online personal finance company based out of San Francisco, California. It made a name for itself in 2012 as the first company to refinance both federal and private student loans. Since then, it has expanded into nearly all consumer lending markets with over $50 billion in loans funded.
Without a doubt, one of the biggest draws to borrowing from SoFi is the wide range of benefits available to its members. These benefits fall into three categories: money, community, and career.
Money benefits include financial planning advice from credentialed advisors, referral bonuses, and member rate discounts. Community benefits include attending networking events, dinners, and happy hours. Career benefits include tools to help you earn a raise, personalized career advice, and an unemployment protection program.
Are you interested in applying for a loan with SoFi? You can prequalify without impacting your credit in minutes by clicking here.
How we chose the best private student loans
Since 2014, LendEDU has been reviewing private student loan lenders to determine the best in the industry. Our most recent evaluation consisted of 12 of our partners, including several of the largest in market share.
Here are the seven categories that we reviewed to score each lender:
Interest rates: The rate on your loan is the most significant indicator of how much your loan will cost over time. We valued lenders that offered low rates and discounts.
Repayment: Most borrowers will spend years repaying their student loans, and because of this, offering flexible repayment options was an important factor in our evaluation. Lenders that had borrower-friendly terms scored the highest.
Loan amount: When you take out a student loan, you want to make sure that the loan can cover all your expenses. Lenders that cover up to the total cost of education were scored highest. Important note: You should only take out what you need. Small student loans are available to avoid borrowing more than you need.
Cosigner benefits: Most estimates have over 90% of new private student loans including a cosigner. Lenders that allowed cosigners to be released from the loan were valued above those that didn't.
Fees: No private lender charging origination, application, or prepayment fees is eligible to be featured on this page. However, there are other fees that lenders may charge, such as late payment fees. The fewer fees charged by a lender, the better they scored.
Better Business Bureau (BBB) rating: The BBB rates businesses between an A+ and F on how likely it is to interact with its customers. For student loan borrowers who will likely have a question or two during the life of their loan, this is a valuable rating to reference. The higher the rating a lender received, the better they scored.
Benefits: To stand out amongst their competitors, most student loan lenders offer unique benefits and rewards. These benefits can include a free subscription, a graduation reward, unemployment assistance, and more. Lenders that provided benefits that helped borrowers better control the cost of their loan were scored highest.
Once we scored each lender, we then determined who was the best for different situations. If a lender wasn't the best for anything, or they didn't allow borrowers to choose between in-school or deferred payments, they were not included on this page.
Is a private student loan a good option for you?
Federal student loans are limited to a certain amount each year of undergraduate study. If you need to borrow more, your options might include federal Parent PLUS loans, private student loans, and some states have loan programs for residents or students in the state.
With all loans, you should understand your budget once you graduate. Once you pay for your basic necessities such as housing, food, and transportation, you should have enough left over to pay the monthly student loan payments from your expected starting salary. If it looks like this will be a problem, more student debt may not be the answer to pay for your college expenses.
Be sure you and your family compare all the costs and repayment options for the various student loan choices.
How to decide which private student loan is the best for you
While our evaluation of our private student loan partners was created as a starting point for students and their families to find the best private student loan, we recommend you do your own research as well.
When looking for a private student loan, comparing your options is the most important thing you can do. By doing this, you’ll be able to find an affordable loan that comes with borrower-friendly repayment terms. Here are the steps we recommend taking to find the best private student loan:
Compile a list of student loan lenders that you're interested in. Ideally, you’ll want to choose between reputable companies that have demonstrated an ability to support borrowers during repayment.
Review the eligibility requirements for each lender. All private lenders have their own unique eligibility requirements. Make sure you're eligible with a lender before applying to limit unnecessary hard credit checks. Remember, we recommend adding a cosigner to your loan to improve your chances of approval, but that cosigner is on the hook to pay back your loan if you are unable to. If you and your cosigner don't meet the eligibility requirements, you should remove that lender from consideration.
Review the loan terms. Make sure you understand what happens if you were to die or become disabled during the loan term. The lenders in our reviews all allow loan discharge for death or disability, but not all lenders have this feature. If you borrow from a lender that doesn’t allow for forgiveness due to death or disability, students should consider inexpensive life insurance to protect their cosigners. Although private student lenders do not have the same income-driven repayment plans as federal student loans, they might have forbearance programs if you lose your job during the repayment period. It can be helpful to understand those programs up-front.
Get quotes from the lenders you're eligible with. While most lenders display an interest rate range on their website, the only way to know the rate you'll receive is by prequalifying or submitting a complete application. Make sure to utilize soft credit checks when possible to reduce the total number of hard credit inquiries on your credit report.
Compare your quotes. Once you’ve received a rate estimate from each lender, compare your offers to see which lender offers you the lowest rate. Make sure to consider other factors like the repayment term, borrower protections, and unique benefits as well.
Choose a lender. The lender you borrow from should offer you the most affordable loan, with borrower protections that help you in times of need during repayment. Once you select a lender, you can submit your application and wait for the lender to inform you of your next steps.
Private student loan FAQ
How do private student loans work?
Private student loans are a form of financial aid that students can use to cover the cost of their education. These loans are offered by banks, credit unions, and online lenders.
You’ll need to apply for a loan directly with a lender and meet certain eligibility requirements to be approved. If you can’t meet the eligibility requirements alone, you’ll need to add a creditworthy cosigner who can.
Most lenders allow you to borrow up to the total cost of attendance, minus any other financial aid you receive. Once your loan amount is finalized, the funds will be disbursed to your school to cover tuition and other expenses. Any remaining funds will be sent directly to you to use as needed.
When you start repaying your loan will depend on which in-school repayment plan you select. Your options include making full, interest-only, fixed, or deferred payments. If you choose full, interest-only, or fixed payments, you'll start making payments while attending school. If you defer your payments until after you graduate, repayment won't begin until your grace period is over. After your grace period, you’ll start making full payments for the duration of your loan term, typically from five to 20 years.
>> Read More: Pros and cons of private student loans
What are the eligibility requirements for a private student loan?
Each lender has its own eligibility requirements. Generally, you'll need to be a U.S. citizen or permanent resident, have good credit, attend a Title IV school at least half-time, and meet an income threshold.
If you can't meet those requirements independently, you'll likely need to add a cosigner to your loan application. Make sure your cosigner understands the risks of being added to the loan. If you’re unable to make your monthly payments, your cosigner will be responsible for continuing to pay back the loan.
If you can't meet the eligibility requirements and don't have a cosigner to add to your loan, there are student loan lenders that student loans without a cosigner and student loans for international students.
>> Read More: Private student loan eligibility requirements
How do student loan interest rates work?
Your interest rate is arguably the most important part of your student loan. For private loans, the interest rate you receive will depend on you or your cosigner’s credit and income, amongst other factors. If you have an excellent credit score and steady income, you are more likely to receive a lower interest rate.
Private student loans also come with either a fixed or variable interest rate. If you choose a fixed rate, your rate will remain the same for the duration of your loan. If you choose a variable rate, your rate will change throughout your loan term and increase or decrease depending on economic conditions.
With private student loans, interest accrues while you attend school. This means that your balance will be larger than your original loan amount when you begin repayment under a deferred repayment plan. However, lenders typically allow you to save on interest by selecting an in-school repayment plan where you make partial payments while still attending school.
>> Read More: Student loan interest rates
Do private student loans have fees?
Private student loans can come with fees; however, none of the lenders listed above charge an origination, application, or prepayment fee. We take this stance because we don't believe borrowers should be charged for taking out a loan or paying one off early.
That being said, let’s look at the different types of fees typically discussed with student loans.
Origination fee: This fee is charged when you take out a loan. It's usually calculated as a percentage of the total loan amount. For example, if you have a $10,000 loan with a 5% origination fee, the fee would come to $500. While federal student loans do come with an origination fee, none of the lenders in our list above charge one.
Application fee: This fee is charged to you when you fill out and submit an application for a loan. Like the origination fee, none of the lenders selected above charge this fee.
Late payment fee: This fee is charged to you if you don't make a payment on time. A lender may set this as a flat amount (e.g., $25) or a percentage of the missed payment (e.g., 5%). Some of the lenders in our list do charge this fee, so we recommend putting together a repayment plan that can help you ensure you stay on schedule with payments.
Prepayment fee: This fee is charged if you pay off your loan early. None of the lenders listed above charge this fee.
How do private student loans differ from federal student loans?
Federal student loans are offered by the Department of Education and require you to fill out the Free Application for Federal Student Aid (FAFSA) to determine eligibility. Federal student loans should always be considered before borrowing private student loans due to lower rates and friendlier repayment benefits, such as income-driven repayment plans and forgiveness programs.
Unfortunately, federal student loans come with borrowing limits that can limit students’ ability to cover their entire cost of attendance. Because of this, many turn to private student loans to bridge the gap.
Private student loans are offered by banks, credit unions, and online lenders. These loans typically allow you to borrow up to the total cost of attendance. Unlike federal student loans, you can’t fill out one application to determine your eligibility for all private student loans. Each lender sets its own eligibility requirements, typically including income and credit minimums.
Whether you borrow from the government or a private lender, always understand if your after-graduation budget will allow you to pay back your student loans before deciding to use them for your education.
>> Read More: Federal vs. private student loans
Recap of the best private student loan companies
LENDERRATES (APR)OUR PICKCOLLEGE AVE4.44% – 15.32%2Best overallSALLIE MAE4.50% – 16.20%Best for cosignersEARNEST4.45% – 16.20%Best for no feesASCENT4.62% – 15.66%Best for forebearance flexibilitySOFI4.49% – 13.80%Best for member benefits
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Can I Get Private Student Loan Forgiveness?
Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
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There’s no such thing as private student loan forgiveness — in most cases, at least.
Two exceptions: If you die or become permanently disabled, as morbid as that sounds, some private lenders will forgive your loan balance.
If you have federal student loans, on the other hand, you can get them partially or fully forgiven through income-driven repayment plans and other federal student loan forgiveness programs.
Even though there aren’t formal private student loan forgiveness programs as for federal student loans, there are a few things you can do to try to ease the burden of your private student debt: Talk to your lender about alternative repayment options; consider deferment or forbearance; or look at student loan refinancing.
1. Talk to your lender about your options.
If you’re struggling to keep up with your private student loan payments, talk to your lender about your options for lowering your monthly bill. Different lenders have different programs for helping borrowers manage payments.
Your lender may be willing to offer you flexible repayment options beyond what we’ve outlined in this chart, so it’s always worth asking. If you don’t know how to phrase your request, try using this sample letter that the Consumer Financial Protection Bureau created to help borrowers ask private lenders for a lower payment. But private lenders aren’t obligated to honor the letter’s request, says Natalia Abrams, executive director of the nonprofit Student Debt Crisis.
Your lender may be willing to work with you to find a repayment solution that fits your needs. If that’s the case, your lender will want to know why you’re struggling to make payments, says Michael VanErdewyk, founder of ReliaMax, a company that insures and services private student loans. Let’s say you’re struggling because you have too many different types of debt. If you have just six months of payments left to go until you pay off your car loan, for example, a lender might let you defer your student loan payments until then, VanErdewyk says.
2. Consider deferment or forbearance.
Many private lenders offer deferment or forbearance, two options that let you temporarily postpone your loan payments. Deferment is typically an option if you’re going back to school or entering the military. Lenders offer forbearance to borrowers who are struggling to make payments because they lost their job, got sick or experienced another financial challenge. In other words, deferment is typically planned, whereas forbearance is a tool for borrowers to use when unexpected circumstances pop up, says Joe DePaulo, co-founder of private student lender College Ave Student Loans.
With both deferment and forbearance for private student loans, interest still accrues during the time when you’re not making payments, so you should go this route only if you really need it. This is different from federal student loan deferment, in which interest doesn’t accrue for borrowers with subsidized loans.
3. Lower your interest rate by refinancing.
If you have good credit, you may be able to get a lower interest rate on your private student loans by refinancing. When you refinance, you choose a new lender that can offer you a lower rate, and that lender will pay off your original lender. Most lenders also let you choose between a fixed interest rate, which stays the same throughout the life of your loan, and a variable interest rate, which changes as the economic markets change. You can compare several student loan refinancing options on NerdWallet’s refinancing page.
Find your best repayment strategy
In addition to these options, create your own repayment strategy to tackle your private student loans. For example, pay the minimum monthly amount toward each of your loans, and then put any extra cash you have toward your loan with the highest interest rate. Tell your lender to apply your extra payment to your loan balance instead of your next monthly payment — that will help you get rid of your most expensive debt faster.
About the author: Teddy Nykiel is a former personal finance and student loans writer for NerdWallet. Her work has been featured by The Associated Press, USA Today and Reuters. Read more
DIVE EVEN DEEPER IN STUDENT LOANS
10+ Student Loan Forgiveness Programs That Discharge Loans
What is a confidential understudy loan?
Confidential understudy loans are regularly given by a bank or monetary foundation, (rather than bureaucratic understudy loans, which are presented by the public authority).
Kinds of private understudy loans
There are private understudy loans for understudies in undergrad, graduate, authentication, dental, clinical, and wellbeing calling programs. Sallie Mae likewise offers private understudy loans for graduates reading up for the final law test, or moving for clinical and dental residencies.
What can private school credits be utilized for?
Whether you're concentrating on the web or nearby, non-public school advances — as well as government understudy loans — for school and graduate school can be utilized to pay for your schooling costs, which for full-time and half-time understudies might include:
Educational cost
Food and lodging
Expenses
Books
Supplies
Transportation
PC for school
Acquire what you want for the whole school year. Apply just a single time with a solitary credit check and subsidizes will be sent straightforwardly to your school or college to cover each term as mentioned. You can drop future payment depending on the situation with no punishment. No extra premium is charged until cash is shipped off your school.
Who is qualified for private understudy loans?
Government and confidential understudy loans utilize different qualification rules.
Administrative understudy loans are presented by the public authority. You can finish up the FAFSA to decide qualification.
For Financed Advances, the US Branch of Training pays the interest while the understudy is in school half time, effortlessness (whenever offered) and approved suspension periods.
For Unsubsidized Credits, the borrower is liable for paying interest during the in-school or elegance periods, or a post-school suspension.
Confidential understudy loans, presented by banks and monetary foundations, depend on your reliability. Your credit — and your cosigner's credit — are assessed, alongside other data gave on your application. Applying for a confidential understudy loan with a financially sound cosigner might expand your opportunities for endorsement and may assist with getting you a superior rate.
You ought to for the most part consider government understudy loans first, and afterward take out a confidential understudy loan on the off chance that you actually need cash for school.
Instructions to search for private credits for school
There are contrasts between confidential credits for school. It's critical to find a respectable understudy loan bank; here are far to view as the right one:
Begin with your school to check whether they offer a bank list.
Affirm that the bank works with your school of decision.
Ask others for proposals on banks they've utilized for their understudy loans.
Ensure you're taking a gander at the right confidential understudy loan for your schooling. There might be various credits for undergrad, graduate, proceeding with schooling, or declaration courses.
Instructions to look at private understudy loans
Whenever you've found several moneylenders, you can contrast their confidential understudy loan choices with see what each offers:
What is the financing cost range?
Might you at any point pick a variable or fixed financing cost?
Are there educational loan charges, similar to a start expense?
Is there a decision of in-school reimbursement choices (fixed, interest just, or conceded)?
Are there helps that assist you with bringing down your loan fee?
Is there a program that allows you to make more sensible installments (like interest just) for a while after you graduate?
Do you approach your FICO® FICO assessment?
Are there different advantages that make the confidential credit for school important?
Is the organization trustworthy, with numerous long periods of involvement?
Applying for private understudy loans
You can apply for private school credits straightforwardly from every bank's site. You ought to apply after you've pursued your school choice and when you know the amount you really want to get, so you will not need to submit separate understudy loan applications for schools you're thinking about.
Step by step instructions to get a confidential understudy loan for school
There's ordinarily no expense to apply for private understudy loans, however there are a couple of things you ought to be aware before you start:
You'll finish up essential individual data and monetary data.
You'll be approached to pick the financing cost type and reimbursement choice for your credit.
You by and large can apply with a reliable cosigner during the application interaction. On the off chance that you apply with a cosigner, they'll need to supply their monetary data in the understudy loan application.
Our confidential understudy loan application process just requires around 15 minutes to get a credit result.
Comprehend the understudy loan application process
What amount would it be advisable for you to get for in confidential understudy loans?
As far as the amount you ought to take out for school, get just what you want to stand to repay later. Contemplate your future vocation and the amount you might make in your picked field. To assist with assessing your future pay potential, you can visit the US Branch of Work at bls.gov.
What amount could you at any point get in confidential understudy loans?
How much cash you can get from a private schooling credit fluctuates by moneylender. Assuming your moneylender requires "school accreditation," your school confirms your enlistment and guarantees that you're not getting more than the expense of participation (counting your government understudy loans, grants, and awards).
Do you want a decent financial record for private understudy loans
Confidential advances for understudies are credit-based. That implies that a loan specialist will check out at your set of experiences of getting cash and repaying it. Government understudy loans, then again, are by and large in view of monetary circumstance and administrative rules as opposed to credit. (Note: A credit check is led for the Government In addition to Credit.)
In the event that you don't have a record, you might require a cosigner. A cosigner can be a parent, relative, or some other financially sound person. Their great financial record might assist you with getting a confidential understudy loan.
Alongside you, a cosigner acknowledges liability regarding reimbursing your confidential understudy loan. On the off chance that you keep your credit on favorable terms, making on-time installments, it tends to be an incredible method for building your own credit. In the event that you fall behind or don't take care of your advance, your cosigner's credit can endure in the event that they don't make installments.
What occurs after you apply for a confidential understudy loan?
After you apply for our private schooling credits for school or graduate school, you'll commonly get a credit choice in the span of 15 minutes of applying. Once supported, you'll likewise get notification to audit, acknowledge, and virtual sign your credit terms.
Your school should guarantee your credit sum before it very well may be dispensed (paid to the school). Then you'll get a Last Revelation explaining the subtleties.
You reserve the privilege to drop your confidential understudy loan as depicted in the Last Revelation before it's dispensed (shipped off) your school.
Realize what occurs after your credit is supported
Dealing with your confidential understudy loans
Beginning with your most memorable semester, it'll be useful to monitor both your government and confidential understudy loans. Here are a few ways to oversee understudy loans and obligation:
You might apply for another credit each year that you're an understudy.
You might should be signed up for school half-time.
Premium gathers on your understudy loan over the lifetime of the advance. Making in-school installments might bring down the complete expense of your advance.
When you leave school, regardless of whether you graduate, you'll for the most part have an effortlessness time of a half year before you start to make head and interest installments.
As you keep on taking out government or confidential understudy loans all through your years in school, keep a rundown of the moneylenders, the amount you're getting — and remember to capably get.
Find out about dealing with your understudy loans
Questions? Need assistance applying?
Call us at
877-279-7172
footnote1. For applications submitted straightforwardly to Sallie Mae, advance sum can't surpass the expense of participation less monetary guide got, as ensured by the school. Applications submitted to Sallie Mae through an accomplice site might be exposed to a lower greatest credit demand sum. Various individual costs (like a PC) might be remembered for the expense of participation for understudies enlisted half-time.
footnoteSallie Mae doesn't give, and these materials are not intended to convey, monetary, charge, or legitimate exhortation. Counsel your own monetary guide, charge consultant, or lawyer about your particular conditions.
footnoteExplore government credits and contrast with ensure you figure out the terms and elements. Confidential understudy loans that have variable rates can go up over the existence of the credit. Government understudy loans are legally necessary to give a scope of adaptable reimbursement choices, including, yet not restricted to, pay based reimbursement and pay contingent reimbursement plans, and credit pardoning and suspension benefits, which other understudy loans are not expected to give. Government advances for the most part have start expenses, however are accessible to understudies paying little mind to pay.
footnoteFederal understudy loan data was accumulated on Walk 1, 2023 from studentaid.ed.gov.
footnoteSallie Mae gives pay to its accomplices to their reference of educational loan clients.
HomeUnderstand AidTypes of Monetary AidLoansFederal Versus Private Credits
With regards to paying for school, vocation school, or graduate school, government understudy loans can offer a few benefits over confidential understudy loans.
Need a credit to help pay for school? Think about government credits first!
In the event that you apply for monetary guide, your school will probably incorporate understudy loans as a component of your monetary guide bundle. It's essential to comprehend what sorts of advances you are advertised. By and large, there are two kinds of educational loans — government and private.
Bureaucratic understudy loans and administrative parent credits: These advances are financed by the central government.
Confidential understudy loans: These credits are nonfederal advances, made by a moneylender like a bank, credit association, state office, or a school.
Assuming you really want to get cash to pay for col
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