Best Private Student Loans

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Mike Brown
Mike Brown
Updated: July 1, 2019

Note from the editor: Our research, news, ratings, and assessments are scrutinized using strict editorial integrity. In full transparency, our company may receive compensation from partners listed on our website. Learn more about how we make money by visiting our advertiser disclosure.

Have you exhausted all of your scholarships, grants, and federal student loan options but still need help paying for college?

If so, then a private student loan may be right for you.

Private student loans provided by banks, credit unions, and other lenders can help bridge the gap between the financial aid you have already received for college and the total cost of attendance.

You can compare interest rates, repayment terms, and eligibility requirements for various private student loan lenders below. Having good credit or a creditworthy cosigner can increase your chances of being approved and qualifying for the lowest interest rates.

On this page:

Compare Private Student Loan Interest Rates and Terms

Get personalized rates and repayment options from the private student loan lenders below.

LenderFixed APRVariable APRRepayment TermsEstimated APR
Discover Student Loans

5.49%%-12.99%%3

Fixed APR

4.24%%-11.99%%3

Variable APR

15 or 201

Repayment Terms

4.47%-12.99%5

Estimated APR

What we like

  • Cover up to 100% of your school-certified college costs1
  • Get a great interest rate with no required fees
  • Cash rewards for good grades2
  • 0.25% auto debit reward while enrolled in automatic payments2
  • Choice of fixed or variable interest rates

Additional Information

See our Discover Student Loans Review and Important Disclosures1,2,3,5

Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

ServicerDiscover Bank
Loan Minimum$1,000
Loan MaximumCost of Attendance1
Loan TypesUndergraduate, Graduate, and Professional
FeesNo application, origination or late fees
College Ave Student Loans

5.29%-12.78%2

Fixed APR

4.20%-11.44%2

Variable APR

5, 8, 10, or 153

Repayment Terms

4.20%-12.78%2

Estimated APR

What we like

  • New private undergrad, graduate, and parent loans available
  • Full, interest-only, flat, and deferred payment choices when in school
  • Zero application fees, origination fees, or prepayment fees
  • 0.25% interest reduction for automatic payments while in school

Additional Information

See our College Ave Student Loans Review and Important Disclosures

ServicerUAS
Loan Minimum$1,0001
Loan MaximumSchool-Certified Expenses1
Loan TypesUndergraduate, Graduate, and Parent
FeesNo origination or prepayment fees
Sallie Mae Student Loans

5.49%-11.85%1

Fixed APR

4.25%-11.35%1

Variable APR

5 to 152

Repayment Terms

4.25%-11.85%1

Estimated APR

What we like

  • Borrow up to 100% of school-certified expenses1
  • Interest, $25 Fixed, or Deferred Repayment Options while in school1,2
  • It takes about 15 minutes to apply and get a credit result
  • 0.25 percentage point interest rate reduction available with auto debit3
  • No application, origination, disbursement, or prepayment fees1

Additional Information

See our Sallie Mae Student Loans Review and Important Disclosures1,2,3

ServicerSallie Mae
Loan Minimum$1,000
Loan MaximumSchool-Certified Cost of Attendance1
Loan TypesUndergraduate
FeesNo origination or prepayment fees1
LendEDU

Easily Compare Private Student Loans

Find out what rates you are eligible for in 3 simple steps!

Easily Compare Private Student Loans

Earnest Student Loans

5.09%-11.44%

Fixed APR

3.99%-11.44%

Variable APR

5, 7, 10, 12, 15

Repayment Terms

3.99%-11.44%

Estimated APR

What we like

  • Four flexible repayment options to save you money
  • 9-month grace period
  • No fees for origination, disbursement, prepayment, or late payment
  • Fast application and approval process can be completed entirely on your phone

Additional Information

See our Earnest Student Loans Review

ServicerEarnest
Loan Minimum$5,000
Loan MaximumUp to 100% of school's certified cost of attendance
Loan TypesUndergraduate and Graduate
FeesNo fees for origination, disbursement, prepayment, or late payment
SoFi Student Loans

5.05%-11.71%

Fixed APR

3.99%-11.39%

Variable APR

5, 10, or 15

Repayment Terms

3.99%-11.71%

Estimated APR

What we like

  • Cover your full cost of attendance
  • Choose between deferred, interest only, partial, and immediate repayment
  • No origination, prepayment or late fees
  • Get a quote online in minutes

Additional Information

See our SoFi Student Loans Review

ServicerMohela
Loan Minimum$5,000
Loan MaximumNo Maximum
Loan TypesUndergraduate, Graduate, and Parent Loans
FeesNo origination or prepayment fees

Best Private Student Loans

If you need a private student loan, you should always be sure to shop around to find the best lender. To make things easier, we researched and analyzed 29 data points for over 20 lenders to find the nine best private student loans for 2019. Select a lender below to jump to their review.

Best Private Student Loans Lenders:

  1. Sallie Mae
  2. College Ave
  3. Ascent
  4. SunTrust
  5. Citizens Bank
  6. PNC
  7. Discover
  8. Wells Fargo
  9. LendKey

1) Sallie Mae

Sallie Mae Student Loans

Sallie Mae student loans are a great choice for borrowers because they provide flexibility, low rates, and a variety of different repayment plans. Students can take out private loans to cover costs of almost every level of education, from undergrad to graduate to professional programs. Loans can be repaid over a period of 5 - 15 years and there are also multiple in-school repayment options.

Here are some key details of Sallie Mae’s student loans:

  • LendEDU Editorial Rating: 5/5
  • Loan Types: Undergraduate, Graduate, Professional, Parent
  • Variable Interest Rates (APR): 4.25% to 11.35% for undergraduates
  • Fixed Interest Rates (APR): 5.49% to 11.85% for undergraduates
  • Discounts: 0.25% interest rate discount for borrowers who enroll in automatic payments
  • Repayment Terms: 5 - 15 years
  • Loan Amounts: $1,000 up to 100% of school-certified cost of attendance minus any other aid received
  • Fees: Sallie Mae charges no origination fee and no prepayment penalties.
  • In-School Repayment Options: Interest-only, $25 monthly, or full deferment until after graduation
  • Cosigner Release: If primary borrower meets certain requirements including making 12 on-time payments

Best Features

  • Sallie Mae loans provide death and disability loan forgiveness, so borrowers and cosigners don’t have to worry about repayment if tragedy strikes.
  • Lengthy deferment periods during internships and residency periods for professional students make it easier to complete your training without worrying about making loan payments.
  • Cosigners will appreciate that Sallie Mae loans have the shortest cosigner release qualification periods in the student loan industry.

Drawbacks

  • There’s no option to get preapproved for a Sallie Mae loan without a credit check.
  • No option to receive in-person support.
Learn More

2) College Ave

College Ave Student Loans

College Ave student loans offers loans to students at different education levels and provides a choice of variable or fixed rate loans. There’s a discount for autopay and borrowers can choose from a large range of repayment plans. With loan amounts between $1,000 and 100% of school-certified cost of attendance, almost every qualified student can find a College Ave student loan that meets their needs.

Here are some key details of College Ave’s student loans:

  • LendEDU Editorial Rating: 4.92/5
  • Loan Types: Undergraduate, Graduate, Parent, and Career Training
  • Variable Interest Rates (APR): 3.99% to 11.98% for undergraduates
  • Fixed Interest Rates (APR): 4.73% to 12.94% for undergraduates
  • Discounts: 0.25% interest rate reduction for making automated payments from your bank account
  • Repayment Terms: 5, 8, 10, or 15 years
  • Loan Amounts: $1,000 up to 100% of school-certified cost of attendance minus any other financial aid
  • Fees: There are no prepayment penalties or origination fees
  • In-School Repayment Options: Full deferment, $25 monthly, interest-only payments, and full principal and interest payments.
  • Cosigner Release: Available after 24 months of making consecutive interest and principal payments on time

Best Features

  • College Ave offers Success Rewards for career loans. This cash-back program provides $150 as a statement credit to the loan principal upon completing a degree.
  • You can pre-qualify for College Ave student loans, so your credit score won’t be affected when you check your rates.

Drawbacks

  • You can’t apply for College Ave loans over the phone.
  • The cosigner release period is twice as long as Sallie Mae’s requirement.
Learn More

3) Ascent

Ascent Student Loans

Ascent is a great option for borrowers who don’t have a cosigner but still need a private student loan. Borrowers also benefit from flexibility in their loan repayment plans and a choice of fixed-rate or variable-rate loans. There are some downsides to Ascent, though, including potentially higher rates if you don’t have a cosigner or good credit.

Here are some key details of Ascent’s student loans:

  • LendEDU Editorial Rating: 4.65/5
  • Loan Types: Ascent Tuition (which is for students with cosigners) and Ascent Independent (which allows eligible juniors, seniors, and graduate students to qualify on their own based on earning potential, satisfactory academic progress, and credit history)
  • Variable Interest Rates (APR): 4.23% to 13.23% for Ascent Tuition Loans and 4.23% to 13.23% for Ascent Independent Loans
  • Fixed Interest Rates (APR): 4.98% to 14.16% for Ascent Tuition Loans and 4.98% to 14.16% for Ascent Independent Loans
  • Discounts: 0.25% discount for making automatic payments from a checking or savings account
  • Repayment Terms: 5, 10, or 15 years for Ascent Tuition Loans and 10 or 15 years for Ascent Independent Loans
  • Loan Amounts: Ascent allows loans between $2,000 and the school-certified cost of attendance, but the maximum aggregate total of Ascent Independent and Ascent Tuition Loans is $200,000
  • Fees: There are no prepayment penalties and no origination fees
  • In-School Repayment Options: Interest-only, $25 monthly, or deferring repayment until after you graduate
  • Cosigner Release: Available after 24 consecutive on-time full payments that cover both the loan principal and interest

Best Features

  • Borrowers who meet certain criteria can get up to a 1% cash reward after graduation.
  • If you refer a friend to Ascent, you can earn a $100 gift card for each referral, up to six friends.
  • Ascent aims to help students qualify without a cosigner by considering potential future earnings and the degree program you’re participating in, among other factors.
  • Ascent provides loan forgiveness in cases of death or disability.

Drawbacks

  • Cosigner release isn’t an option until 24 payments have been made, which is double Sallie Mae’s requirement.
  • The minimum loan amount of $2,000 is higher than some other lenders.
  • Rates can be higher than competitors for some Ascent loans.
Learn More

4) SunTrust

SunTrust Student Loans

SunTrust offers several different loans for undergraduates, graduate students, and business school students. Borrowers benefit from a choice of repayment plans as well as multiple options for in-school payments, including deferment or interest-only payments.

Up until 8/31/19, SunTrust is offering 0.50% off interest rates for new Custom Choice Loans through its Summer Savings Program. A premium discount with proof of graduation also helps borrowers save on repayment.

Here are some key details of SunTrust’s student loans:

  • LendEDU Editorial Rating: 4.55/5
  • Loan Types: Undergraduate, Graduate, Graduate Business School
  • Variable Interest Rates (APR): 3.27% APR to 10.80% APR for the Custom Choice Loan® and from 3.77% APR to 13.25% APR for the Union Federal Private Student Loan
  • Fixed Interest Rates (APR): 4.07% APR to 11.30% APR for the Custom Choice Loan and from 4.77% APR to 13.95% APR for the Union Federal Private Student Loan
  • Discounts: 0.25% interest rate reduction for consistent on-time payments on the Union Federal Private Student Loan, as well as up to a 0.50% discount for autopay on all SunTrust private student loans
  • Repayment Terms: For the Union Federal Private Student Loan and Custom Choice Loan, borrowers have the option to repay loans over 7, 10, or 15 years. A Graduate Business School Loan can be repaid over 7 or 10 years.
  • Loan Amounts: Students in most states can borrow between $1,000 and $65,000 for the Custom Choice Loan or Union Federal Private Student Loan. Students can borrow up to $95,000 for the Graduate Business School Loan.
  • Fees: There are no fees to apply, no origination fees, and no prepayment penalties
  • In-School Repayment Options: Full deferment, $25 monthly payments, or interest-only payments or full principal and interest payments.
  • Cosigner Release: After 36 consecutive on-time principal and interest payments are made.

Best Features

  • SunTrust loans reward borrowers with either a 1% principal reduction (for Graduate Business School Loans) or a 2% principal reduction (for Custom Choice Loans) after graduation.
  • SunTrust loans are available to most U.S. citizens and permanent residents and the Union Federal Private Student Loan is also available to international students.
  • APRs are competitive, especially with discounts for autopay and on-time payments.

Drawbacks

  • Cosigner release isn’t available until after 36 on-time principal and interest payments, while many competitors allow cosigner release after 12 or 24 months. However, SunTrust will count lump sum payments that are larger than a regular monthly payment as multiple months.
  • Loan limits are lower than many competitors.
Learn More

5) Citizens Bank

Citizens Bank Student Loans

Citizens Bank provides loans for undergraduates, healthcare professionals, MBA students, and grad students. Parents can also take out a Citizens Bank student loan to pay for their children’s education.

Discounts are available for having a student checking account with Citizens Bank, as well as for autopay, which can make loans cheaper. There are, however, borrowing limits and a long period of required payments before cosigner release is possible.

Here are some key details of Citizen Bank’s student loans:

  • LendEDU Editorial Rating: 4.31/5
  • Loan Types: Undergraduate, Graduate, Professional, and Parent
  • Variable Interest Rates (APR): 4.14% to 11.64% for undergraduates
  • Fixed Interest Rates (APR): 5.47% to 12.04% for undergraduates
  • Discounts: 0.50% discount on rates for autopay and for opening a student checking account with Citizens Bank
  • Repayment Terms: 5, 10, or 15 years
  • Loan Amounts: $1,000 up to $100,000 (undergrads) or $110,000 (graduate students)
  • Fees: No loan application fees, origination fees, disbursement fees, or prepayment penalties
  • In-School Repayment Options: Interest-only, full interest and principal, full deferment until after graduation. Deferred loans may have higher interest rates.
  • Cosigner Release: Available after 36 consecutive on-time principal and interest payments

Best Features

  • Borrowers can get discounts on interest for opening a student bank account with Citizens Bank.
  • Citizens Bank is the only student loan lender that provides multi-year loan approval as an option. This means you may be able to get funding secured for all of your years of schooling without having to apply again later.
  • Interest rates are competitive, especially if you begin making payments immediately on your loan instead of deferring payments while in school.

Drawbacks

  • Cosigner release isn’t available until 36 consecutive full payments are made, which is longer than many competitors.
  • Citizens Bank has lower loan limits than many competitors offer.
  • You’ll pay a higher interest rate for deferred payments while in school if you borrow from Citizens Bank.
Learn More

6) PNC

PNC Student Loans

Whether you are an undergraduate, graduate student, or professional student, there’s a PNC student loan available to help you fund your education.

Borrowers with PNC loans benefit from a 0.50% discount for autopay, which is a bigger discount than what some competitors offer. There are also flexible repayment options when it comes to both in-school payments and repayment after graduation.

On the downside, cosigner release isn’t available until after 48 monthly payments, which is a much longer cosigner release period than most competitors offer.

Here are some key details of PNC’s student loans:

  • LendEDU Editorial Rating: 4.29/5
  • Loan Types: Undergraduate, Graduate, and Professional
  • Variable Interest Rates (APR): 4.99% to 11.34% APR including 0.50% discount for automatic payments.
  • Fixed Interest Rates (APR): 4.58% to 11.13% APR including 0.50% discount for automatic payments.
  • Discounts: 0.50% discount on interest rates for making automatic payments
  • Repayment Terms: 5, 10, or 15 years
  • Loan Amounts: Up to $50,000 annually (undergrad) or $65,000 (graduate) with an aggregate limit for all educational debt of $225,000.
  • Fees: No application fees, no origination fees, and no prepayment penalties
  • In-School Repayment Options: Full deferment until leaving school, interest-only, full principal and interest
  • Cosigner Release: After 48 consecutive on-time monthly payments of both principal and interest

Best Features

  • Would-be borrowers can apply for loans up to 60 days after the school term ends and can receive a preliminary decision on their application within minutes of applying for a loan.
  • Remaining loan balances are forgiven if a borrower passes away.
  • Interest rates are competitive for both undergraduate and graduate students.

Drawbacks

  • The maximum loan limits are lower than some competitors’ loans.
  • Cosigner release is not available until after 48 consecutive full payments are made, which is a much longer time period than many competitors require.
Learn More

7) Discover

Discover Student Loans

Discover student loans are available for undergrads, grad students, as well as professional students. You can also get loans for completing additional training or certification requirements, such as residency or Bar exam prep loans.

Discover student loans have long repayment timelines but interest rates may be higher than loans offered by competitors. Cosigner release also isn’t possible, but on the bright side, discounts are available for borrowers with good grades.

Here are some key details of Discover’s student loans:

  • LendEDU Editorial Rating: 4.24/5
  • Loan Types: Undergraduate, Graduate, MBA, Health Professional, Law School, Residency, and Bar Exam Prep
  • Variable Interest Rates (APR): 4.24% to 11.99% for undergrads3 (rates include an interest-only repayment discount and a 0.25% interest rate reduction for automatic payments)
  • Fixed Interest Rates (APR): 5.49% to 12.99% for undergrads3 (rates include an interest-only repayment discount and a 0.25% interest rate reduction for automatic payments)
  • Discounts: 0.25% interest rate deduction for enrolling in automatic payments
  • Repayment Terms: Up to 15 years for undergrads and up to 20 years for graduate students
  • Loan Amounts: $1,000 up to 100% of school-certified cost of attendance, although aggregate loan limits apply
  • Fees: No fees including origination fees, prepayment penalties, or application fees
  • In-School Repayment Options: Full deferment, $25 monthly, interest-only, or full principal and interest
  • Cosigner Release: Not available for private student loans issued after 2/1/2012

Best Features

  • Borrowers who earn a 3.0 GPA or better will receive a 1% cash reward on each new student loan they take out, as long as the reward is redeemed within the limited redemption period.
  • You can apply online for Discover student loans in 15 minutes or less and get a timely answer after you finish the application process.
  • There are no fees charged for Discover student loans.

Drawbacks

  • Cosigner release isn’t available if your loan was issued by Discover after 2012.
  • Interest rates are higher than on many competitor loan offers.
  • You can’t choose a repayment term like most other lenders, though there is no penalty for paying off loans early.
Learn More

8) Wells Fargo

Wells Fargo Student Loans

Wells Fargo student loans provide educational loans to undergrads, grad students, professional students, and parents.

Borrowers can repay loans over 15 or 20 years and can qualify for interest rate discounts if they have other Wells Fargo student loans or if they have a checking account with Wells Fargo. Cosigner release is also possible after 24 consecutive on-time payments.

Here are some key details of Wells Fargo’s student loans:

  • LendEDU Editorial Rating: 4.17/5
  • Loan Types: Undergraduate, Graduate, Parent, Career Training, and Community College
  • Variable Interest Rates (APR): 5.04% to 10.92% for undergrads
  • Fixed Interest Rates (APR): 5.94% APR to 11.26% for undergrads
  • Discounts: 0.25% interest rate reduction for having a previous Wells Fargo student loan or a consumer checking account that qualifies for the discount. Enrolling in automatic payments also results in an additional 0.25% interest rate reduction.
  • Repayment Terms: 15 or 20 years
  • Loan Amounts: $1,000 to the cost of attendance with a lifetime loan limit for all educational debt of $120,000
  • Fees: No application or origination fees and no prepayment penalty
  • In-School Repayment Options: Full deferment, interest-only, or full interest and principal
  • Cosigner Release: After 24 consecutive scheduled payments are made in full and on time

Best Features

  • Discounts are available to borrowers who have prior loans with Wells Fargo or who have a Wells Fargo checking account.
  • College students have flexibility when it comes to repayment terms and in-school payment options.
  • Wells Fargo doesn’t charge any fees for its student loans.

Drawbacks

  • The cosigner release is longer than with Sallie Mae but is shorter than some other competitors.
  • Wells Fargo has lower aggregate borrowing limits than some competitors.
  • Wells Fargo offers competitive rates but they aren’t the lowest rates among the best private student loan lenders.
Learn More

9) LendKey

LendKey Student Loans

LendKey works differently than most of our other best student loan lenders. With LendKey, you get matched to loans from partner community banks and credit unions. LendKey services the loans you take out but loans aren’t available in all states.

Borrowers have a choice of repayment terms and cosigner release is also possible after 24 consecutive on-time payments.

Here are some key details of LendKey’s student loans:

  • LendEDU Editorial Rating: 4.14/5
  • Loan Types: Undergraduate
  • Variable Interest Rates (APR): 4.46% to 9.43%
  • Fixed Interest Rates (APR): 5.36% to 9.07%
  • Discounts: 0.25% interest rate reduction for enrolling in automatic payments
  • Repayment Terms: 10 years
  • Loan Amounts: 2,000 up to the school-certified cost of attendance. There’s an aggregate loan limit of $160,000 for educational debt.
  • Fees: No prepayment penalties, no application fees, and no origination fees
  • In-School Repayment Options: Full deferment, interest-only, or $25 monthly payments
  • Cosigner Release: After 24 months of full payments are made on time

Best Features

  • LendKey connects you with credit unions and community banks that often have lower interest rates than other lenders do.
  • There are no fees charged by LendKey, including no origination fees, application fees, or prepayment penalties.

Drawbacks

  • Shopping around for interest rates isn’t possible without applying for a loan through LendKey.
Learn More

How We Chose the Best Private Student Loan Companies

LendEDU has rated and reviewed private student loan lenders since 2014. These ratings are completed by our Editorial team and are not influenced by compensation in any way.

In order to find the best student loans for this article, four members of our team collectively spent over 50 hours analyzing 29 data points for over 20 different lenders.

Data points considered were broken into five categories: Product, App & Eligibility, Repayment, Benefits & Discounts, and Customer Service. Each overall category and each data point within each category was weighted based on its importance to borrowers. You can see the breakouts and weightings below:

  • Product (40%): Interest Rates (30%), Term Lengths (35%), Loan Amounts (25%), Fees (10%)
  • App & Eligibility (20%): Soft Credit Pre-Approval (30%), State Availability (30%), Types of Schools Eligible (40%)
  • Repayment (20%): In-School Repayment (40%), Forbearance (15%), Deferment (15%), Cosigner Release (30%)
  • Benefits & Discounts (10%): Benefits (50%), Discounts (50%)
  • Customer Service (10%): Ways of Contact (40%), Better Business Bureau Rating (30%), Trustpilot Rating (30%)

To learn more about how these ratings work, you can visit our Ratings Methodology page.

Private Student Loan Information

The following sections will help you learn more about how private student loans work including the application process, eligibility requirements, cosigning process, and more.

It might make sense to discuss potential borrowing amounts with a financial planner or CPA who can help evaluate the feasibility of your future repayment plan. For reference, private student loans can typically be used for tuition, textbooks, room and board, and all other related educational expenses.

Private Student Loan Application Process

Applying for private student loans can be easy. These days, most private student loan lenders prefer that you apply online. Many offering mobile-friendly applications for easy access on the go.

Typically, after choosing a lender, you will first have to fill out some basic personal and educational information. If you are electing to use a cosigner, they may have to provide some information as well.

If you meet the initial requirements, you will next likely be required to upload documents so the student loan lender can determine your eligibility and interest rate.

Within a few days (and sometimes within a few hours), the lender will let you know if you are eligible and, if so, what interest rates and repayment terms you can choose from.

The last step is to sign the promissory note. This is a legally binding contract that requires you to pay back the student loan, over time, with interest. Shortly after you sign this note, your student loan funds will be sent to your school for disbursement.

Private Student Loan Eligibility Requirements

Private loans require borrowers to meet certain eligibility requirements. Each lender has its own specific requirements, but most lenders will examine an applicant’s credit score, assets, debt, income, college or university, and proposed field of study.

Generally, you will need to have at least an average credit score of close to 700 (on a scale of 300 to 850). Otherwise, you'll likely need a cosigner to qualify for a private student loan. A 2017 study by LendEDU found that the average credit score of an approved applicant for a private student loan was 739.

>> Learn More: Student Loans for Bad Credit

Cosigning Private Student Loans

A cosigner is a person who signs a loan agreement along with the primary borrower. The cosigner agrees to pay the loan if the borrower cannot do so, regardless of the reason. A cosigner should have a higher credit score than the borrower to ensure they have a positive impact on the application. Some lenders do offer cosigner release programs after a certain number of on-time payments are made.

In the same 2017 study done by LendEDU mentioned earlier, it was found that 28.75% of applicants with a cosigner were approved for a private student loan while only 4.90% without were approved. In addition, those with a cosigner, on average, had an interest rate that was 1.49 percentage points less than those without a cosigner.

>> Learn More: Student Loans Without a Cosigner

Benefits of Using a Cosigner
  • More likely to be approved
  • Receive a lower interest rate
  • Have someone to motivate you to stay on top of loans
  • Cosigner may be discharged later through refinancing
Risks of Using a Cosigner
  • Credit of primary borrower and cosigner will both be affected if payments are missed
  • Cosigner's retirement could be delayed
  • Cosigner's assets could be put at risk
  • Cosigner will be required to make payments if the primary borrower does not

Other Requirements

In addition to having a good credit score, most banks also require that applicants for private loans be U.S. citizens or either permanent or temporary legal residents.

>> What's next? See if You're Eligible for a Private Student Loan

Private Student Loan Interest Rates

Private student loan interest rates are determined by the lenders issuing the loans. Your interest rate, along with your repayment term, determines how much you will have to pay in addition to your principal student loan balance. The higher your interest rate, the more you will pay, and vice-versa. For this reason, finding low-interest student loans can help reduce the overall cost of your loan.

Most private lenders allow students to select a fixed or variable interest rate.

Fixed interest rates will stay the same for the lifetime of the loan. However, variable interest rates fluctuate over the lifetime of the loan because they move with the market causing them to increase or decrease.

Variable rates typically start lower than fixed rates because they have the potential to increase and even end up higher in the future. The 2017 study done by LendEDU mentioned earlier also found that variable interest rate private student loans, on average, started out 1.85 percentage points lower than those with fixed rates.

>> Learn More: Student Loan Interest Rates

Repayment Options

Most private student loan lenders give you a choice of a few repayment options. Popular options include:

  • Full payments: Make full monthly payments while in school. This saves the most money in interest.
  • Partial payments: Make a flat payment each month to help reduce the total cost of your loan. This does not save as much as making full payments, but saves more than full deferment.
  • Interest-only payments: Pay only the accrued interest each month. When you graduate, your loan balance will be equal to what you originally took out.
  • Full deferment: Do not make any payments while in school. Interest will continue to accumulate the entire time making this the most expensive option.

>> Learn More: Visit our Student Loan Refinance Guide to Consolidate Existing Loans

Private Student Loan Servicers

Student loan servicers are your main point of contact regarding your loans. They work on behalf of the bank or private lender that provided you a private student loan. You will be assigned a servicer when you take out your student loan. Your servicer will:

  • Accept your payments
  • Help you decide optimal repayment plans
  • Assist you with any general questions regarding your student loans
  • Help you in times of hardship

Differences Between Federal Student Loans and Private Student Loans

Federal Student LoansPrivate Student Loans
LenderFederal governmentPrivate banks, credit unions, and other lenders
Interest Rate TypeFixedFixed or variable
Repayment OptionsNot required until after graduationMay be required while in school or not until after graduation
Approval Based onThe FAFSA and expected family contributionCreditworthiness, income, debt, school, sometimes field of study, and other factors
Cosigner RequirementsDo not need a cosignerMost private lenders require a cosigner

>> Learn More: Visit our Federal Student Loans Guide

Private Student Loan Downsides

While many students will need private student loans to cover the cost of college, there are some downsides to consider:

  • Generally higher interest rates than federal loans
  • Fewer repayment options than federal loans
  • Usually cannot be discharged in bankruptcy or upon the borrower’s death
  • Credit will be damaged if payments are missed

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