What to know first: Federal student loans are almost always a better first choice than private student loans, but they have borrowing limits and qualification requirements. When federal loans aren't enough, private student loans can cover tuition, room and board, fees and other costs of higher education once you've reached your federal limit.
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Use each lender's deep-dive to help you better understand the loan product, who it's best for and how to qualify.
Overview: Ascent offers the most comprehensive incentive programs out of the lenders we reviewed. Borrowers who qualify can take advantage of the automatic payment discount, a one percent cash back graduation benefit, a $250 amazon gift card per referral and one-on-one coaching through its student success program.
Overview: College Ave offers private loans for students seeking undergraduate, graduate, dental, law, medical and business degrees. Parents can also take out loans on behalf of their college-bound kids, and students interested in attending community college or receiving career training may also apply.
Overview: While most of the lenders we review only have an online presence, Citizens Bank has nearly 1,000 locations across the country. As the oldest institution on our list, Citizens Bank has garnered a solid reputation over the years as a reliable and staright-forward lending option.
Overview: Sallie Mae is among the most well-known student loan lenders on our list and was originally founded in 1973. Unlike other lenders, Sallie Mae doesn't require its applicants to be full-time students, regardless of the degree program or loan type.
Overview: While most lenders offer interest rate reductions, Custom Choice's Grad Reward takes 2 percent off your principal balance after you graduate. Plus, it's one of the only companies that doesn't require applicants to meet the SAP requirements set by their school.
Overview: SoFi is one of the most recognizable online lenders in the student loans space, and for a good reason. It's best known for its member benefits and perks, including exclusive access to the SoFi stadium, a personalized reward and redemption program and a SoFi PLUS membership.
Overview: ELFI is a nonprofit organization that values a personal relationship with its borrowers, having provided over $20 million in scholarships. The company is known for its financial literacy high school program and recently awarded a customer $50,000 to help him and his family pay off their loans.
Overview: Earnest is a well-known online lender that offers a variety of repayment terms and programs, which isn't a given with every student loan lender. Among its options are an extended term program, a deferment or forbearance option, loan forgiveness and discharge and a hardship rate reduction program.
Overview: Functioning as a financial resource, INvestEd is an online lender that offers residents of Indiana — and those attending an in-state school — a competitive student loan option. It's also one of the most engaged lenders out of the ones we've reviewed. It has an events calendar and attends hundreds of events annually across the state.
Overview: Unlike some, MEFA doesn't have any state restrictions on its loans — borrowers just need to attend an eligible U.S. nonprofit college or university.
Overview: Edly's student loans are FDIC-insured and feature a unique income-based repayment program that recalculates a borrower's monthly payment each year, based on their income. This can help make payments more affordable, especially those just starting out in their careers.
Use Bankrate's calculator to find the perfect loan repayment plan for you. Enter different loan amounts, terms and interest rates to compare estimated monthly payments and see how much total interest you'll pay.
Navigating the landscape of private student loans can be a complex process, but with the right information and guidance, you can make the best decision for yourself. Here are some factors to consider to help compare private student loan options:
Interest rates play a big role in determining the overall cost of borrowing with private student loans. These rates can have a significant impact on the total amount you repay over the loan period.
For example, if you borrow $20,000 with an interest rate of 6.01%, you will end up paying $6,656.80 in interest for a loan term of 10 years. For an interest rate of 10.02% for the same amount of money and loan term, you would end up paying $11,742.40 in interest, which is significantly higher.
A private student loan is a loan used to cover qualifying academic-related expenses. You can take out private student loans through banks, online lenders, credit unions and sometimes through colleges and state agencies. These usually have higher borrowing limits than federal student loans and may offer lower interest rates for borrowers with good credit, but they come with fewer borrower protections.
To qualify, you’ll need to meet the lender’s eligibility requirements and go through a credit check. Applicants with good or excellent credit tend to get the lowest interest rates. Because undergraduates usually don’t have extensive credit histories, they typically need a cosigner to take out a private student loan.
Some lenders specialize in student loans without a cosigner for undergraduates. To determine your eligibility and rate, they may evaluate your performance in school, earning potential, work history and more.
Unlike other types of loans, you likely won't receive the funds. Instead, they'll be sent to your school or college. From there, you can use the money for academic-related expenses, like technology, room and board and tuition.
Before applying for a private student loan, consider the benefits and drawbacks of this type of financing.
Here's what you can expect from most private student loan applications:
While private and federal student loans are both viable ways to pay for college, there are some differences to keep in mind:
| Federal student loans | Private student loans | |
|---|---|---|
| Where do they come from? | The U.S. Department of Education | Banks, credit unions, online lenders |
| How much can you borrow? | Up to $31,000 for dependent undergraduates, up to $57,500 for independent undergraduates, up to the full cost of attendance for graduates | Varies by lender; often up to the full cost of attendance |
| What are the interest rates? | 6.53% for undergraduates, 8.08% or 9.08% for graduate students; all fixed rates | 3.39% to 17.99%; may be fixed or variable |
| What are the benefits? | Income-driven repayment plans, loan forgiveness options, extensive deferment and forbearance | Low interest rates for borrowers with good credit, potential discounts and rewards, larger loan amounts |
| What are the drawbacks? | Limited loan amounts for undergraduates, only one interest rate option | Credit check required, high interest rates for borrowers with poor credit |
Mark Kantrowitz
Bankrate Expert Contributor, Student Loans
"Students should borrow federal first, because federal student loans are cheaper, more available and have better repayment terms. Private student loans are an option when a borrower exhausts the federal loan limits, which range from $5,500 to $7,500 for dependent students, depending on the year in school (and $9,500 to $12,500 for independent students). If a borrower reaches these loan limits, their main options are private or parent loans. But, needing to borrow more than the federal student loan limits may be a sign that you are borrowing too much money. You should aim to borrow no more than your annual starting salary for your entire education. If total student debt is less than annual income, you should be able to repay your student loans in ten years or less. If you do need to borrow parent or private loans, compare the interest rates, fees and other benefits on both types of loans. Shop around for the lowest interest rate. If you have an excellent credit score, or a cosigner with excellent credit, you may be able to qualify for a lower rate on a private student loan than a Federal Parent PLUS loan."
Discover the next steps you can take to make the best decision with your private student loan.
Types of private student loans
Differentiate between loan types to choose the option that best aligns with your financial goals and preferences.
What are the requirements for private student loans?
Explore the different eligibility criteria to determine your qualification for private student loans.
What can student loans be used for besides tuition?
Discover how private student loans can cover various education-related expenses beyond tuition.
When to refinance your private student loans
Learn the benefits of refinancing your private student loans, including potentially lower interest rates.
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The Bankrate team evaluated over two dozen lenders to select our top picks for the best student loans. To do this, Bankrate uses a 16-point system to evaluate student loan lenders. This scoring criteria measures how lenders perform across three main categories.
Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.
