A college education can open a lot of doors for students, but it also comes with the threat of debt, especially when federal financial aid isn’t an option. Private student loans often come with higher interest rates and fewer borrower protections, making them best used as a last resort when federal aid and other resources fall short.
However, a new survey from LendEDU reveals something that you may find surprising: 71% of borrowers said their private student loan was worth it.
LendEDU surveyed borrowers to better understand how they navigated the decision to take on private student debt, what risks they faced, and what they wish they knew before signing. Their responses reveal financial pressure, a lack of confidence in understanding loan terms, and divides across generations, gender, race, and income level.
The survey explored why borrowers took the leap, what they wish they knew beforehand, and how to borrow smarter if you’re considering a private loan.
1. Many borrowers had no federal options
For some students, private loans weren’t a choice but rather a necessity. When asked why they didn’t use federal aid, borrowers cited various eligibility barriers, including:
- Enrolled less than half-time (31.46%)
- Already had a bachelor’s or graduate degree (30.34%)
- Pursuing non-degree, certificate, or bootcamp programs (20.22%)
- Citizenship or residency issues (16.85%)
- Missed the FAFSA deadline (15.73%)
In these cases, borrowers weren’t passing over federal loans—they simply didn’t qualify. One respondent put it plainly: “In my case, it made more sense to go this way, and I didn’t have to deal with a lengthy application process and endless red tape, so I would recommend it.”
“In my case, it made more sense to go this way, and I didn’t have to deal with a lengthy application process and endless red tape, so I would recommend it.”
– Age 61 male, retired and living in the Midwest U.S. on a middle-class income ($50,000 to $54,999)
2. More than half of borrowers hesitated over interest rates, but many find the trade-off worthwhile
It’s no secret that private student loans can be expensive. Over half (52.17%) of borrowers said high interest rates were their top hesitation, followed by not knowing which lenders to trust (26.47%), eligibility criteria (25.33%), and the overall complexity of the process (24.20%).
Yet despite those concerns, 70.7% of borrowers said they would recommend a private student loan to someone in a similar situation.
That doesn’t mean they weren’t nervous, just that they found the return on investment worthwhile. As one respondent said: “As long as you obtain a degree that will get you a job after school, student loans are just fine.”
As long as you obtain a degree that will get you a job after school, student loans are just fine.
– Age 34 male, living in the Southern U.S., employed full-time with an upper-middle-class income ($100,000 to $124,999)
3. Low interest rates were the top concern for three-quarters of respondents
When asked what mattered most in choosing a lender, borrowers zeroed in on the fundamentals. For 74.29% of respondents, a low interest rate was very important, followed by:
- Good company reputation (59.92% said “very important”)
- Flexible repayment plans (55.20% said “very important”)
- Good customer reviews (48.77% said “very important”)
Features like access to a financial advisor (48.02%), cosigner release (43.86%), and large loan amounts (36.67%) were ranked lower in importance. For most borrowers, it came down to affordability and trust.
Among features that were considered “not important” are accepting immigrant applications (64.08%), low credit score requirements (37.43%), large loans (36.67%), cosigner release programs (32.33%), and access to a financial advisor (26.47%).
If you’re looking to secure a lower interest rate, borrowers recommend comparing multiple lenders, improving your credit score, and applying with a cosigner if possible. One borrower added: “With a reputable lender, the terms are spelled out, and there are no surprises.”
With a reputable lender, the terms are spelled out, and there are no surprises.
– Age 58 male, living in the Southern U.S. (Texas) with a high-income household ($250,000 to $499,999)
4. More than half of borrowers weren’t confident about loan terms
Understanding loan terms is critical because it helps you avoid costly surprises and ensures you know exactly what you’re committing to. But more than half of respondents (57.28%) weren’t fully confident they understood theirs.
Confidence varied by income, gender, and race:
- High-income borrowers were the most confident (52.13%), while lower-middle earners were the least (35.42%).
- White borrowers had the highest confidence (44.35%), followed by Black and multiracial borrowers. Chinese and Indian borrowers were the least confident (22.22% and 25%, respectively).
- Men were slightly more confident than women (45.4% vs. 42.2%).
For anyone considering a private student loan, it’s crucial that you read the fine print and ask questions about anything you don’t understand.
5. Demographics help shape perceptions
While 71% of borrowers overall recommend private loans, support varies based on where you live, your background, and your lender.
By region
According to survey results, 75.56% of private loan borrowers in the West recommended private student loans, followed by 73.33% of borrowers in the South, 66.67% in the Northeast, and 62.71% in the Midwest.
Interestingly, those rankings also line up with how confident borrowers in each region were in understanding their loan terms.
By race
Asian borrowers were the most likely to recommend private student loans, despite being the least confident of any racial group in understanding loan terms. Here’s how the different groups break down:
- Asian: 76.67%
- White: 72.89%
- Black: 67.53%
- Multiracial: 65.38%
- Other: 48.15%
By household income
Borrowers in higher income brackets were more likely to recommend private loans and show confidence in understanding their loan terms.
But while 188 students from high-income families said they took out private loans compared to 104 students from upper-middle income families, the latter had a higher recommend rate.
A full 75% of upper-middle income students recommend private loans, followed by 72.34% of high-income students. After that, it’s lower-middle income students (69.79%), low-income students (69.51%) and very-low income students (62.75%).
By gender
We did not observe a significant difference between genders when it comes to recommendations. Female borrowers (70.91%) were only slightly more likely than male borrowers (70.69%) to advocate for private loan use.
By generation
Gen Z borrowers (74.36%) were the most likely to recommend private student loans, followed by Gen X (73.47%), Baby Boomers (72.31%), and the Silent Generation (71.43%). Then, there’s a steep dropoff among Millennials, with only 64.97% recommending private loans.
Confidence about understanding loan terms was also the lowest among Millennials, with 38.85% said they were fully confident compared to 48.72% of Gen Z borrowers.
This may suggest that the youngest generation is better prepared for college financing, or may simply be better at researching unfamiliar terms .
By lender
The lender you choose can have a significant impact on your overall experience and whether or not you’d recommend others follow in your footsteps.
According to survey respondents, College Ave appeared to provide the best customer experience, as 86.96% of its borrowers recommended private student loans.
SoFi (79.31%), Discover (78.26%), and Sallie Mae (74.03%) also had high recommend rates.
PNC Bank (66.67%) and Citizens Bank (60%) were the only lenders below the average recommend rate.
The bottom line
Private student loans aren’t always ideal, but for many borrowers, they’re essential, and most borrowers ultimately felt the trade-offs are worth it.
Still, the decision to take out a private loan shouldn’t be made lightly. Before signing, take time to:
- Exhaust every other option: This includes savings, scholarships, grants, work-study programs, and other forms of financial aid.
- Compare lenders carefully: Prioritize low rates, flexible repayment, and strong reviews from current and past customers.
- Apply with a cosigner if needed: Applying with a creditworthy cosigner can improve your approval odds and secure better terms.
- Ask questions until you’re sure: If you don’t understand a term or condition, don’t be afraid to pause and get clarity from the lender.
- Borrow only what you truly need: Every dollar you borrow is one you’ll have to repay with interest. Run the numbers on your expenses and other financial resources to ensure you only borrow what you need.
Above all, make sure you fully understand your loan agreement before you sign it. Confidence in your decision starts with understanding what you’re getting into.
In case you’ve exhausted your federal financial aid, school aid package, and scholarship opportunities, and are currently in need of funding for school, here’s our list of top-rated private student loan lenders: Best Private Student Loans in 2025: Reviewed and Ranked.
Survey Methodology
The survey, conducted on May 13, 2025 via a third-party survey platform, sampled 1,000 respondents online through desktop and mobile devices to gather data on private student loan borrowers’ financial situations, motivations for borrowing, and debt repayment strategies in 2025.
The survey used Random Device Engagement (RDE), which recruited participants during their regular online activities across various websites and apps. This method minimized selection bias and improved the reliability of the data. Stratified random sampling divided participants into subgroups based on factors like age, income, and employment status. Within each stratum, respondents were selected randomly, ensuring diversity and reducing sampling error.
The survey included single-selection, slider-scale, and open-ended questions to gather categorical, continuous, and qualitative data. Descriptive statistics, stratification adjustments, and response weighting were applied to analyze the results.
A margin of error of ±3.1% at a 95% confidence level was calculated using the formula: MOE = z × √[ p(1 – p) / n ] where:
= 1.96 (z-value for a 95% confidence interval)
= 0.5 (maximum variability)
= 1,000 (sample size)