Best Private Student Loans: When it comes to financing your education, you may find that federal student aid, scholarships, and grants are simply not enough to cover the rising costs of college tuition. In such cases, private student loans become a valuable option to bridge the financial gap and make your educational dreams a reality. However, navigating the world of private student loans can be daunting. That’s where we come in.
Best Private Student Loans: College Ave Student Loans
Interest Rates (APR): 4.41% – 16.99% Our Rating: 4.8 stars
When it comes to selecting the best private student loan, College Ave stands out as a top choice. Based in Wilmington, Delaware, College Ave is dedicated to making higher education more accessible by offering tailored loan solutions.
Why College Ave?
College Ave distinguishes itself with its Multi-Year Peace of Mind™ feature, which enhances your chances of approval for future loans when applying with a cosigner. This unique benefit has helped 90% of undergraduate borrowers secure additional loans for subsequent academic years.
But that’s not all. College Ave also empowers you to choose your repayment term, providing clear explanations of how your choice impacts the long-term cost of your loan.
Key Takeaways:
- You have the flexibility to select your repayment term.
- Multi-Year Peace of Mind™ increases your approval odds for future loans.
- All four in-school repayment options are offered.
- College Ave covers up to 100% of certified costs.
- Cosigner release is available once you’ve completed at least half of your repayment term.
Best for Cosigners: Sallie Mae
Interest Rates (APR): 4.50% – 16.45% Our Rating: 4.7 stars
Sallie Mae, headquartered in Newark, Delaware, is a prominent player in the private student loan market. Originally a government entity, Sallie Mae has since transitioned into a fully privatized bank offering private student loans.
Why Sallie Mae?
Sallie Mae earns its spot as the best choice for cosigners due to its short cosigner release period. After you graduate, make 12 on-time principal and interest payments, and meet specific credit requirements, you can apply to release your cosigner from the loan.
Sallie Mae borrowers also enjoy advantages such as Multi-Year Advantage and no origination or application fees. The Multi-Year Advantage program increases approval rates for students with cosigners returning for subsequent academic years.
Key Takeaways:
- Cosigners can be released after 12 on-time payments.
- Multi-Year Advantage enhances approval chances for future loans.
- Even students attending school less than half-time are eligible.
- Sallie Mae covers up to the total cost of attendance.
- Prequalification is not available with a soft credit check.
Best Comparison Tool: Credible
Interest Rates (APR): Varies by lender
Our Rating: 4.7 stars
Credible sets itself apart from traditional lenders by offering a free comparison tool that simplifies your private student loan search. Instead of applying to multiple lenders individually, Credible enables you to fill out a single online application and compare prequalified rates from its partner lenders.
Why Credible?
Credible’s platform is designed to save you time and effort. You can receive real prequalified rates without impacting your credit. If you decide to move forward with an offer, Credible’s staff will assist you in completing the application with the chosen lender.
Key Takeaways:
- Quickly see prequalified rates in just 3 minutes.
- Checking your rates does not affect your credit score.
- No application fees, and you’ll receive $200 if you don’t find your best private student loan rate.
- Keep in mind that Credible only displays offers from its partners.
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Best for No Fees: Earnest
Interest Rates (APR): 4.42% – 16.20% Our Rating: 4.7 stars
Earnest, an online lender headquartered in San Francisco, California, is on a mission to make higher education more affordable for everyone. What sets Earnest apart is its commitment to transparency and fee-free borrowing.
Why Earnest?
Earnest doesn’t charge origination, application, or late payment fees. Unlike some lenders who claim to have no fees but only refer to origination and application fees, Earnest truly offers fee-free borrowing. Additionally, you can make use of benefits like a longer-than-average grace period and the option to skip one payment each year.
Key Takeaways:
- No origination, application, or late payment fees.
- You can skip one payment per year without impacting your credit.
- Checking your rate won’t affect your credit score.
- Earnest covers up to the total cost of attendance.
- Cosigner release is not available.
Best for Eligibility: Ascent
Interest Rates (APR): 4.48% – 15.94% Our Rating: 4.7 stars
Ascent, an online student loan lender based in San Diego, California, offers a unique array of student loan options. These include traditional cosigned loans, non-cosigned credit-based loans, and non-cosigned future income-based loans.
Why Ascent?
Ascent introduces its Ascent Connect program, providing dedicated Success Coaches to active undergraduate students. These coaches assist students in navigating their academic journeys and career searches. The program also includes a free app with valuable tools, one-on-one coaching sessions, and scholarship opportunities.
Key Takeaways:
- Offers cosigned, non-cosigned, international, and DACA student loans.
- You can earn 1% cash back with proof of graduation.
- Check your rate without affecting your credit score.
- Ascent does impose borrowing limits.
Best for Career Services: SoFi
Interest Rates (APR): 4.24% – 13.55% Our Rating: 4.6 stars
SoFi, a nationally chartered bank headquartered in San Francisco, California, is a well-established player in the student loan market. SoFi made waves in 2012 by becoming the first company to refinance both federal and private student loans. Since then, it has expanded its offerings significantly.
Why SoFi?
SoFi distinguishes itself by offering an array of benefits to its members, including complimentary career coaching. Members can work one-on-one with career coaches to advance their careers, transition into new ones, or build their personal brands. The support is tailored to individual goals and needs.
Key Takeaways:
- Borrowers enjoy unemployment protection, career coaching, and other member benefits.
- No fees are charged.
- Checking your rate won’t impact your credit score.
- SoFi covers up to the total cost of attendance.
- Note that SoFi has a higher minimum loan amount compared to other lenders.
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Other Noteworthy Private Student Loan Options
While the lenders reviewed above rank among the best, a few others deserve mention for their unique benefits:
- Rhode Island Student Loan Authority (RISLA): Ideal for Rhode Island students and residents, RISLA offers rate discounts and unique rewards such as a four-year interest-free period for nurses working in Rhode Island.
- Custom Choice: Graduates who provide proof can receive a 2% cash back reward.
- Discover: Earning good grades can result in a 1% cash back reward for each new student loan received from Discover.
In conclusion, selecting the right private student loan is a crucial decision that can significantly impact your educational journey. Each of the lenders mentioned here has its strengths, and the best choice for you will depend on your unique financial circumstances and goals. We encourage you to explore your options, compare rates, and consider the benefits each lender offers. Your pursuit of higher education is an investment in your future, and with the right private student loan, you can make it a reality.
We understand that choosing the right private student loan can be a complex and crucial decision in your pursuit of higher education. To assist you in making an informed choice, we have conducted a rigorous evaluation of various private student loan lenders since 2016. Our goal is to provide you with the necessary information to find the best student loans tailored to your needs and financial circumstances.
In our most recent evaluation, we assessed 18 lenders, analyzing 25 data points for each lender, resulting in a comprehensive analysis comprising 450 data points. These data points were categorized under 12 key areas: transparency, eligibility requirements, rates, repayment terms, loan amounts, cosigner policies, fees, customer experience, company history, and benefits.
Each lender was individually scored on a scale of one to five in each category, based on how it compared to others in that category. The weighting of each category was determined by its importance to consumers. These weighted scores were then tallied to generate a final editorial rating for each lender. Our ratings are presented in star format, ranging from one star (poor) to five stars (excellent). We round these ratings to the nearest tenth decimal place.
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These star ratings serve as a valuable resource to help you identify which lenders are best suited for specific borrowing purposes. We believe that no two lenders can be equally optimal for the same purpose, so we provide “best for” designations only once, ensuring that each recommendation is unique.
However, it’s essential to consider whether a private student loan is the right choice for your specific circumstances. Federal student loans offer certain benefits and protections that private loans may not provide. Federal loans have annual limits for undergraduate students, and if you need to borrow beyond those limits, you might explore options such as federal Parent PLUS loans, private student loans, or state-based loan programs available to residents or in-state students.
Regardless of the type of loan you consider, it’s crucial to assess your financial situation upon graduation. You should ensure that, after covering essential expenses like housing, food, and transportation, you have sufficient funds remaining to meet your monthly student loan payments based on your expected starting salary. If this seems challenging, accumulating more student debt may not be the best solution to finance your college expenses.
To make an informed choice among private student loans, follow these steps:
- Create a List of Lenders: Compile a list of student loan lenders that pique your interest. Opt for reputable companies with a track record of supporting borrowers during repayment.
- Review Eligibility Requirements: Examine the eligibility criteria for each lender. Each lender has unique eligibility requirements, and ensuring you meet them before applying can help avoid unnecessary hard credit checks. Adding a cosigner, if eligible, can enhance your approval chances. However, remember that your cosigner is responsible for repaying the loan if you cannot. If you and your cosigner do not meet the requirements, exclude that lender from consideration.
- Study Loan Terms: Thoroughly understand the loan terms, including what happens in the event of your death or disability during the loan term. While our reviewed lenders offer loan discharge for death or disability, not all lenders provide this feature. If you borrow from a lender that does not offer forgiveness for these circumstances, consider affordable life insurance to protect your cosigner. Private student lenders may not offer the same income-driven repayment plans as federal loans, but they may provide forbearance programs if you lose your job during repayment. Familiarize yourself with these programs in advance.
- Request Quotes: Request quotes from the lenders for which you meet the eligibility criteria. Although most lenders display an interest rate range on their websites, the only way to determine the rate you qualify for is by prequalifying or submitting a complete application. Utilize soft credit checks whenever possible to minimize the number of hard credit inquiries on your credit report.
- Compare Quotes: Once you have received rate estimates from each lender, compare the offers to identify the lender offering the lowest rate. Consider other factors such as repayment term, borrower protections, and unique benefits as well.
- Choose a Lender: Select the lender that offers you the most affordable loan with borrower protections that can assist you during repayment. Once you’ve made your choice, submit your application and await the lender’s instructions for the next steps.
How do private student loans work?
Private student loans are a financial aid option that students can use to cover the costs of their education. These loans are offered by banks, credit unions, and online lenders.
To obtain a private student loan, you must apply directly with a lender and meet specific eligibility requirements for approval. If you cannot meet these requirements on your own, you may need to add a creditworthy cosigner to your application.
Most private 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 are disbursed to your school to cover tuition and other expenses. Any remaining funds are provided directly to you for additional educational needs.
The timing of loan repayment depends on the in-school repayment plan you select. Options include full payments, interest-only payments, fixed payments, or deferred payments. If you choose full, interest-only, or fixed payments, you will begin making payments while still attending school.
If you opt to defer payments until after graduation, repayment begins once your grace period concludes. After the grace period, you will make full payments for the duration of your loan term, typically ranging from five to 20 years.
What are the eligibility requirements for a private student loan?
Eligibility requirements for private student loans vary by lender. In general, you must typically be a U.S. citizen or permanent resident, have a good credit history, attend at least half-time at a Title IV school, and meet certain income thresholds.
If you are unable to meet these requirements independently, you will likely need to add a cosigner to your loan application. It is essential that your cosigner understands the risks associated with being added to the loan.
In the event that you are unable to make your monthly payments, your cosigner will be responsible for repaying the loan.
For those who cannot meet eligibility requirements and lack a cosigner, there are lenders that offer student loans without a cosigner and even options for international students.
How do student loan interest rates work?
The interest rate on your student loan is a critical component. For private loans, your interest rate is determined based on your or your cosigner’s credit and income, among other factors. Borrowers with excellent credit scores and stable income are more likely to secure a lower interest rate.
Private student loans offer both fixed and variable interest rates. With a fixed rate, your interest rate remains constant throughout the loan term. In contrast, a variable rate fluctuates during your loan term, rising or falling in response to economic conditions.
Interest begins accruing on private student loans while you are in school. This means that when you enter repayment under a deferred repayment plan, your loan balance will be higher than the original loan amount. However, most lenders provide the option to make partial payments while in school, allowing you to reduce the interest accumulated.
Do private student loans have fees?
While private student loans can come with fees, none of the lenders we have reviewed charge origination, application, or prepayment fees. We hold the belief that borrowers should not be burdened with fees for taking out a loan or paying it off early.
It is essential to understand various types of fees typically associated with student loans:
Origination Fee: Charged when you take out the loan, typically calculated as a percentage of the total loan amount. For example, a $10,000 loan with a 5% origination fee would result in a $500 fee. While federal student loans may have origination fees, none of the lenders listed above charge such fees.
Application Fee: This fee applies when you complete and submit a loan application. None of the lenders featured in our list charge an application fee.
Late Payment Fee: Incurred if you miss a payment deadline. Lenders may set this as a fixed amount (e.g., $25) or as a percentage of the missed payment (e.g., 5%). Some lenders in our list do charge late payment fees, so we advise creating a repayment plan to ensure timely payments.
Prepayment Fee: Levied if you pay off your loan ahead of schedule. None of the lenders we reviewed impose prepayment fees.