Best Private Student Loans of 2024

After exploring scholarships, grants, and federal student loans, a key way to pay for college can be finding the best student loans for higher education through private loans from banks and other lenders.
Private student loans can be easier to qualify for than federal student loans, which are provided by the federal government and of which are based on financial need.
Federal loans often have more flexible repayment plans, though private student loans offer different loan repayment terms, including making interest-only or fixed payments while in school. Private student loan offers the choice of a fixed or variable interest rate
Either way, you have to pay back the money you borrow, plus interest, whether you graduate or not. Knowing which student loan programs are best can save you money, which can help students and their parents.
Note that the student loan interest rates quoted are as of January 10, 2023, and may change at anytime. Go to each company’s website for the latest information.

Overview of the best private student loans

Provider
Best For
Sallie Mae
0.25% autopay discount
Ascent
Future income-based option
Earnest
Having fair credit
SoFi
Online services
Citizens Bank
Multiyear approval
College Ave
Instant decisions
Discover
Minimal fees
LendKey
Multiple lender options
PNC
0.50% autopay discount

Best private student loans

Sallie Mae

You’ve probably heard of Sallie Mae. It started in 1973 as a government entity servicing federal student loans.
The lowest variable interest rate Sallie Mae offers, 5.0%, only comes after a 0.25% rate reduction when a student or cosigner enrolls in automatic debit payments for the monthly payments. Its fixed interest rate loans start at 4.5% APR. The annual percentage rate assume a $10,000 loan to a freshman with no other Sallie Mae loans.
As with other types of school loans, students have a better chance of being approved for a loan if they have a cosigner. Sallie Mae says students with a cosigner are three times more likely to get approved. This person is usually a parent with good credit and is responsible for repaying the loan if the student doesn’t.
The above rates are for the most credit-worthy customers and include autopay discounts. However, students getting a loan independently are more likely to have worse or no credit scores and could see higher interest rates upto 15.33% for a variable rate and up to 15.10% for a fixed rate through Sallie Mae.

Ascent

Ascent is an online lender that makes it easy to apply, qualify for, and repay its private student loans.
The interest rates offered by Ascent vary depending on how you repay a loan. Interest-only payments or a $25 minimum payment can be made while you’re in school. For the lowest rate, payments can be deferred until six months after graduation.
It also has a creative solution for students who don’t want a traditional co-signed loan or a credit-based non-co-signed loan they qualify for. Both of those are available, but college juniors and seniors who don’t have credit, income, or a co-signer can borrow money for college based on their future income.
A minimum credit score isn’t required for Ascent’s future income-based loan. Instead, it evaluates loan applications based on the student’s school, major, future earning potential, academic progress, and credit history.

Earnest

If you have a fair credit score, meaning at least a 650 FICO credit score, then the online lender Earnest may be best for you.
Getting a private student loan on your own may be best if you don’t have a friend or family member with a good credit score or who isn’t willing to be a co-signer.
A 650 FICO score is very close to the “good” credit score range of 670-739, according to Experian. Along with a 650 credit score, Earnest requires at least a three-year credit history, enough savings to cover two months of expenses and other student loans, and can’t carry a large amount of debt. You must be a full-time student.
Earnest allows a payment to be skipped once a year, though it must be repaid later. Student loan borrowers can pay monthly or every two weeks, with a 0.25% rate discount for autopay. A nine-month grace period is given for repayment to begin after graduation, which is longer than the six months most lenders offer.

SoFi

Most online lenders have applications that are easy to fill out online. If they don’t, what’s the point of going there? SoFi does that and much more with its excellent online services for school loans.
Its lending process is completely online. Like many private student loan lenders, it offers a 0.25% autopay discount, and borrowers may qualify for a 0.125% discount on additional loans.
SoFi doesn’t disclose a minimum credit score requirement, but it requires borrowers to be employed or have enough minimum income from other sources, including a cosigner, to repay loans. Borrowers must also have satisfactory academic progress, including good grades and completed credit hours toward completing a degree.
SoFi members get free access to Edmit Plus, a tool to estimate financial aid, compare costs of attendance, and learn about other forms of financial aid.
It also offers free career coaching, free advice from a financial planner, and exclusive member events. Its website offers various resources, including student loan refinances calculators and advice on choosing a fixed or variable interest rate.

Citizens Bank

Most student loan lenders require borrowers to reapply each school year if they need more money for the coming school year. Citizens Bank allows multi-year approval, meaning once they’re initially approved, students can secure loans for subsequent years without getting a credit check every year.
To enjoy this benefit, however, borrowers must go through a hard credit inquiry that could slightly drop their credit score. There is no preapproval or instant application.
Once approved, a soft credit inquiry is made for additional academic years. Future student loans won’t impact a credit score, the bank says. If your plans change, you can borrow only the money you need.
Interest rates drop by 0.25% when enrolled in autopay and another 0.25% for Citizens Bank customers.

College Ave Student Loans

With loans available in all 50 states, College Ave Student Loans specializes in simple loan applications with quick decisions. It also has some of the lowest variable interest rate student loans.
Like a few other lenders, borrowers at College Ave can make full on-time payments while in school, pay interest only, a flat fee, or defer payments. Terms range from five to 15 years.
Part-time undergraduate students can get loans from College Ave, as can graduate students who are enrolled for less than half time.
The company’s website has an excellent loan calculator to determine the cost of a loan and your student loan options. Slide the scales to make small monthly payments while in school, and you can see how the post-school payments drop and lower the aggregate loan cost.

Discover

Discover Bank is known for not having fees on its credit cards, and it continues that with its student loans. It has no application, origination, or late fees.
It also offers discounts for having good grades and for certain payment options.
Interest rates are reduced by 0.25% for automatic payments. An additional 0.35% discount is given for selecting the interest-only repayment option and making interest-only payments during the in-school and grace periods.
Discover doesn’t disclose qualifying criteria, and prequalification isn’t available. A hard credit pull is made for applicants, which could hurt your credit score.

LendKey

LendKey works with credit unions and community banks to allow online borrowers to find many types of loans that meet their needs. A single application allows students to review and consider multiple lenders, saving them time from doing it individually.
LendKey has no origination or application fees, though other fees vary by lender. A 0.25% discount is given for autopay.
You must complete the application process and apply for a loan to find out what loan terms you can get and if you’re approved. No online pre-approvals are available. A credit history of at least 36 months is required, and cosigners are accepted.

PNC

Most student loan lenders offer a 0.25% interest rate reduction for having autopay. PNC doubles that to 0.50% for choosing automatic withdrawal, called ACH, from a checking or savings account.
PNC also has loans tailored toward health and medical professionals, health professions residency, and law students studying for the bar exam.

Summary of the best private student loans

Note that some interest rates may include a discount for having autopay and a co-signer.
Provider
Variable rates start
Fixed rates start
Loan amount
Loan length
Sallie Mae
5.00%
4.50%
$1,000 to total cost
10 to 15 years
Ascent
5.31%
4.62%
$2,001 to $200,000 for undergraduate, $400,000 for graduate
5 to 20 years
Earnest
4.49%
4.49%
$1,000 to total cost
5 to 20 years
SoFi
4.62%
4.49%
$5,000 to total cost
5 to 20 years
Citizens Bank
4.59%
5.99%
$1,000 to $750,000
5 to 20 years
College Ave
3.99%
3.99%
$1,000 to total cost
5 to 20 years
Discover
NA
NA
$1,000 to total cost
10 to 20 years
LendKey
4.86%
4.89%
Up to total cost
5 to 20 years
PNC
5.14%
4.49%
$1,000 to $225,000
5 to 20 years

FAQs

When is a private student loan a good idea?

Private student loans are often used to refinance federal student loans to get a better interest rate.
Federal Direct PLUS loans for graduate students or parents who want to pay for school can be the most expensive option among federal loans. A private student loan might be better if you have good credit or a steady income.
But long before you decide, you should fill out the Free Application for Federal Student Aid, or FAFSA, to check your eligibility for federal financial aid beyond federal student loans. These include grants, scholarships, and gift aid. If federal loans and free money options are exhausted, then a private student loan may be exactly what you need.
A private student loan can fill a funding gap if other financial aid doesn’t cover your costs. Some federal student loans have borrowing limits and don’t cover the entire cost of attendance. Student loans can also be used to pay for summer school, which can help you graduate earlier.
If your expenses suddenly change and you need money, a private student loan can help. Maybe you need to move, or your laptop dies. Instead of a cash advance from a credit card, a low-interest student loan may be a better choice.

What is forbearance?

You may see the term “forbearance” when researching student loan providers. We did.
It simply means that the lender allows you to put off paying the loan temporarily. Deferment is another term that’s used.
These options may be needed by students or recent grads struggling with loan payments. Many lenders allow loans to be deferred for six months after graduation. Borrowers also often have the option not to make any payments while in school, though they can make at least a minimum payment to lower the education loan costs.
Some lenders, such as Discover, forgive student loans for borrowers and co-signers if the primary borrower dies or is permanently disabled.

What should I look for in the fine print?

There are many details of a student loan to be certain of before you agree to the loan terms. Here are a few to look for:
  • Loan limits: How much you can borrow is important. Loans start at $1,000, but some lenders require borrowing at least $5,000, which may be more than you need for a few expenses. At the higher end, some loans only go so high, though most should be for up to the cost of attending school for a year.
  • Prepayment penalties: Most lenders don’t charge fees for paying off student loans early.
  • Repayment options: Most lenders have around four repayment plan options to make the repayment over the life of the loan. These include in-school payments such as full principal and interest, interest-only payments, and a flat $25 monthly. It’s common not to pay anything while in school and to put off payments until six months after graduating.
  • Origination fee: None of the lenders we reviewed charge this fee, which is sometimes charged on loans.
  • Automatic payments: If you set up autopay from your checking account, you’ll often get a 0.25% interest rate deduction.

Why you should use a private student loan

If you don’t qualify for student aid in grants, scholarships, gifts, or other forms, then you may want to apply for a student loan.
Unlike private student loans we’ve reviewed here, federal student loans are usually cheaper because the interest rate is fixed and often lower.
However, in today’s environment, lower interest rates are common, variable rates on student loans have dropped considerably, making a variable-rate private student loan cheaper than a federal loan at a fixed rate.
If you have a federal student loan at a high, fixed interest rate, shopping for a private student loan and comparing costs can be worthwhile.

Why you shouldn’t use a private student loan

If you qualify for a federal student loan, and it’s at a good interest rate, it can be a good way to pay for college for several reasons.
Federal student loans are subsidized, meaning the government pays the interest while you’re in school, at least on a half-time basis. Private student loans are often not subsidized. Payments can be deferred until after graduation, but the interest charges will continue compounding while you’re in college.
If you have poor credit or don’t know someone with good credit who will cosign a loan, a student loan can be hard to get. At least a “fair” credit score is needed to qualify for a private student loan. Most federal student loans, except PLUS loans, don't require a credit check.
A private student loan may also not be right for you if you plan to work in a public service field. Teachers, doctors, and others can have federal student loans forgiven by working in public service. Private lenders don’t offer such loan forgiveness.

The bottom line

After a mortgage, student loans will likely be the largest amount of debt you’ll ever have and keep in mind, private loans will not have forgiveness programs.
Still, no one wants to take on student loan debt if they don’t have to. Trying to get as much free financial aid as possible is a good idea, as is borrowing money if you have to.
To find the best student loan, shop for a lower interest rate. Select a loan term with monthly payment amounts you expect you can afford when you graduate.
If you don’t qualify independently, look for a cosigner with good credit for help. It probably won’t be the last thing you ever ask your parents for, but it can lead to a lifetime of higher earnings.

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