Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate student loans to write unbiased product reviews.
If you've already used your savings, federal student loans, and student aid to pay for college and still find that you're short on cash, a private student loan could be a good option.
Best Private Student Loan Companies of 2024
The best student loans available are federal student loans. But if you need to turn to a private lender, here are a few of the best places to begin your search.
- SoFi Undergraduate Student Loans
- Sallie Mae Undergraduate Student Loans
- Ascent Undergraduate Student Loans
- Earnest Undergraduate Student Loans
- College Ave Undergraduate Student Loans
- Custom Choice Undergraduate Student Loans
- MPower Financing Undergraduate Student Loan
Understanding Private Student Loans
What are private student loans?
Private student loans are educational loans offered by private companies. Any student loan that isn't offered through the federal government is considered a private student loan.
How do private student loans different from federal loans?
Unlike federal student loans, which are issued by the government, private student loans are issued by private lending companies and don't offer as many opportunities for loan forgiveness.
Take the federal student loan forbearance offered by the government during the coronavirus pandemic. While private lenders may have offered their own help for people experiencing hardships, private student loan borrowers didn't get that widespread benefit or keep interest rates at 0%.
While federal student loans have fixed interest rates, private loans can have fixed or variable rates, and they're typically higher than federal rates. Private student loans generally offer fewer options for repayment.
If you'll need student loans to afford college, you should start by exploring your federal loan options by completing the FAFSA (Free Application for Federal Student Aid). Since federal loans usually have more favorable terms, prioritize these before private student loans.
Top Private Student Loan Lenders
The best lenders have competitive student loan interest rates, a variety of repayment terms, and no origination fees. Our list of the best options includes picks for both undergraduate and graduate students.
SoFi Undergraduate Student Loans
SoFi® private student loans are best for graduate students. SoFi is one of the few lenders offering lower interest rates for graduate school loans than undergraduate loans.
While SoFi's interest rates are competitive with others on the list, what makes SoFi unique are its other features. This lender offers some good protections for student loan borrowers, like career services. Additionally, SoFi's student loans have no late fees (though it's worth noting that interest will still accrue).
Watch out for: High maximum loan amount. SoFi's minimum loan amount is $1,000 — if you need a small student loan, it might be worth turning to a lender that makes smaller loans.
Regular Annual Percentage Rate (APR): 5.99% - 15.86% variable and 3.99% - 14.83% fixed (with AutoPay discount)
Fees: N/A
Loan Amount Range: Minimum of $1,000
Ascent Undergraduate Student Loans
Ascent private student loans are a flexible option for almost any student loan borrowers. Interest rates are competitive, and terms range from five to 15 years.
Cosigners are allowed and encouraged. A relatively unique feature is Ascent's cosigner release. Make 12 consecutive on-time payments, and Ascent can release a cosigner from your student loan.
What to watch out for: Ascent limits borrowers' total loans to $400,000, including any other federal or private student loans outside of Ascent.
Regular Annual Percentage Rate (APR): 5.99% - 15.95% variable and 3.69% - 15.21% fixed (with AutoPay discount, varies by plan)
Fees: None
Loan Amount Range: $2,001 - $200,000 ($200,000 aggregate total)
Earnest Undergraduate Student Loans
Earnest's private student loans offer low starting interest rates and very flexible repayment terms. Earnest has four options for repayment, including a nine-month deferral after school. Earnest doesn't charge any fees, including prepayment or origination fees on private student loans, which makes it a strong option.
Earnest also advertises the ability to skip a payment once per year. But that doesn't mean that you're off the hook for that payment, since interest will still add up and your payoff will be delayed. Your payments could be higher if you take full advantage of these features, and they could increase your total payoff time and loan amount.
But if used the right way, Earnest's private student loans could still beat the competition with such low starting interest rates.
What to watch out for: Some of Earnest's flexible features aren't the right fit for everyone. The ability to delay loans for nine months may not be as great as it sounds, since interest still accrues during this period, growing your loan's balance.
Regular Annual Percentage Rate (APR): 5.62% - 16.85% variable and 3.74% - 16.49% fixed (with AutoPay discount)
Fees: $0
Loan Amount Range: $1,000 - 100% of education cost
College Ave Undergraduate Student Loans
College Ave ties has one of the lowest starting interest rates on private student loans, since undergraduate fixed-rate loans start with an interest rate of 3.69%. Interest rates for grad school students are also competitive with SoFi's lower interest rates for this group.
It's a good choice for both graduate and undergraduate students, and it offers four options for repayment. College Ave allows cosigners for loans and offers parent loans in addition to undergraduate and graduate loans, starting at the same interest rate as the undergraduate interest rate.
What to watch out for: Late payment penalty. You'll fork over a late payment of 5% of the amount due, capped at $25 if you fall behind on your payments.
Regular Annual Percentage Rate (APR): 5.59% - 17.99% variable and 3.69% - 17.99% fixed (with AutoPay discount)
Fees: late payment of 5% of the amount due, capped at $25
Loan Amount Range: Minimum of $1,000
College Ave Student Loans Review
Sallie Mae Undergraduate Student Loans
Sallie Mae doesn't charge any origination and prepayment fees, and you also get four months of the study service Chegg for free. Chegg offers expert Q&A, and students can submit up to 20 questions per month.
What to watch out for: Sallie Mae sets your repayment term length, so if you want to choose your term length another lender is a better option.
Regular Annual Percentage Rate (APR): 5.54% - 15.70% variable and 3.69% - 15.49% fixed
Fees: late payment of 5% of the amount due, capped at $25
Loan Amount Range: Starts at $1,000
Sallie Mae Student Loans Review
Custom Choice Undergraduate Student Loans
Custom Choice offers loans of up to $99,999 annually that come without fees, and you can check your rates within a few minutes.
Custom Choice also offers a 2% reduction on your loan principal after you provide the lender with proof of graduation, as well as a .25% interest rate reduction when you sign up for AutoPay.
What to watch out for: No mobile app. If you want to manage your loans on the go, you won't be able to with Custom Choice.
Regular Annual Percentage Rate (APR): 5.39% - 15.57% variable and 4.43% - 14.04% fixed
Fees: N/A
Loan Amount Range: $1,000 - $99,999
Custom Choice Student Loans Review
MPower Financing Undergraduate Student Loan
MPower Financing offers fixed loans designed for international students. You can get a loan without a cosigner, collateral, or US credit history. Most other lenders that offer loans to international students require a US citizen or permanent resident to cosign on the loan.
What to watch out for: High interest rates. While the lender's starting interest rates are higher than many of the other lenders on this list, we included it because of its accessibility for international students.
Regular Annual Percentage Rate (APR): 13.74% to 14.75% fixed (with AutoPay discount)
Fees: 5% origination fee and undisclosed late fee
Loan Amount Range: $2,001 — $100,000 lifetime
MPower Financing Student Loans Review
Which Private Student Loan Lender Is the Most Trustworthy?
We've only selected private student loan lenders with no public controversies in the last three years. We've also compared each institution's Better Business Bureau score.
The BBB, a non-profit organization focused on consumer protection and trust, evaluates companies by judging a business's responses to consumer complaints, honesty in advertising, and clarity about business practices. Here is each company's score:
| Lender | BBB grade |
SoFi Student Loans | A+ |
Ascent Student Loans | B |
Earnest Student Loans | A+ |
College Ave Student Loans | A+ |
Sallie Mae Student Loans | A+ |
Custom Choice Student Loans | N/A |
MPower Financing Student Loans | A+ |
Of our top picks, only Ascent and Custom Choice are not currently A or higher by the BBB. Custom Choice isn't rated by the BBB at all, and Ascent has a B rating due to 11 complaints filed against the business.
Customer experience can vary widely, so this doesn't necessarily reflect Ascent or Custom Choice's trustworthiness overall. You should ask others about their experiences with the businesses before deciding against borrowing from the companies.
How to Choose the Best Private Student Loan
Key Factors to Consider
When shopping for a private student loan, the main factors you'll be comparing across lenders are:
- Interest rates — Unlike federal student loans, which have fixed interest rates set by the federal government, private student loans come with fixed rates that are generally higher, or variable rates that can change. You'll want to find the lowest interest rate possible, and consider the risk of choosing a variable rate that could go up in the future.
- Fees — Some private student loan lenders tack on extra charges like origination fees when you open a loan or late payment penalties. Look for a lender with as few fees as possible.
- Term lengths — Make sure you choose a lender with repayment term lengths that work for you. Some lenders will choose the term length for you, while others offer a variety of options. Student loans can affect your credit score, potentially lowering it significantly, if you are late or skip payments, so you'll want to pick a repayment term that works with your monthly budget.
- Repayment options — Look for a private student loan lender that has a variety of repayment options. For example, the best private student loan lenders offer the ability to defer payments until after you graduate.
Comparing Interest Rates and Terms
Remember that the best private student loan for you will depend on your credit score, with higher credit scores generally qualifying for lower interest rates.
Pay close attention to term lengths, too, since shorter term lengths will entail larger monthly payments. This is a great way to save on interest, but you'll need to evaluate your budget to see whether you can afford it.
Make sure to compare offers with several lenders before making a final decision.
Applying for a Private Student Loan
Unlike with federal student loans, which require filling out the FAFSA, you can apply for private student loans directly through a given lender. But you'll need to make sure you're eligible to apply first.
Eligibilty Requirements
Generally, to get a private student loan you must:
- Be a U.S. citizen, permanent resident, a temporary resident with an eligible co-signer, or have DACA status
- Be enrolled at least half-time in a school that is part of the lender's network
- Meet certain income requirements
- Pass a credit check or apply with a co-signer who can
Required Documents
To apply for a private student loan, you'll typically need to provide the following:
- Your Social Security card
- Your school of enrollment and area of study
- The loan amount you need
- Personal information including your address, phone number, and income history
Application Process
You can apply for a private student loan via a lender's website. Navigate to the application section, where you'll be asked to fill in information such as the items above.
After you complete the initial application, you'll generally see your prequalified rates and an approval decision. Generally the results will include various options with a range of monthly payments.
From there, choose the option that works best for you, and sign the paperwork. Once you officially sign the paperwork for the loan, your funds will arrive within a matter of days or weeks.
Benefits and Drawbacks of Private Student Loans
Advantages
- Variable rates — Unlike federal student loans, private loans often come with variable rates rather than fixed rates. Sometimes, the variable rates start lower than rates on federal loans, but keep in mind that variable rates can change at any time.
- No origination fees with most lenders — While some private student loan servicers, such as MPower Financing, do charge origination fees, the majority do not. With federal student loans, expect to pay an origination fee.
Disadvantages
- Fewer options for loan forgiveness — Federal loans come with more opportunities for forgiveness, while with personal student loans you'll get short term relief at most.
- Need high credit score to qualify for the best rates — To save on interest rates, you'll need an excellent credit score or to apply with a co-signer with a high score.
- Interest starts accruing while you're in school — Some federal student loans don't accrue interest while you're studying, but that's not the case with private student loans.
- Higher rates in general — Overall, private student loans charge higher interest rates than federal ones, and this is especially true with fixed rates.
Private Student Loan FAQs
A private student loan is a student loan offered through a private loan company rather than the federal government. Private student loans generally have less favorable terms than federal loans, so you should prioritize any federal loan options first and then consider private loans for any gap in funding.
Students can apply for a private student loan either on their own or with a co-signer. The private student loan applciation process usually requires a credit check, so if you don't have an established credit history, you may need a co-signer to qualify.
Private student loan interest rates can be either fixed or variable. The higher your credit score, the lower your rate should be.
Yes, you can refinance your private student loans with most lenders, and it could be worth it if you're able to reduce your loan interest rate or adjust the repayment terms.
Whether or not it's a good idea to take out a private student loan depends on your unique financial situation. You may consider alternatives such as a less expensive school, scholarships, or a side job to earn more money. Whatever your decision is, make sure you understand the terms of your loan before making a choice.
While private student loan repayment options vary from lender to lender, in general the options include immediate repayment, interest-only payments while you're in school, and defering payments until after you graduate.
Our Experts' Advice on Choosing the Best Private Student Loan
We consulted the following loan and financial experts to give their insights into finding the best low-interest student loans for your needs.
- Sean August, CEO at The August Wealth Management Group
- Ryan Wangman, former loans reporter at Personal Finance Insider
How should I determine how much to borrow through a student loan?
Sean August:
"The loan amount should be high enough to cover your education expenses, but not so high that you borrow more than you can afford to repay."
Ryan Wangman:
"Look at the total cost of your education, and subtract any 'gift aid' you'll receive, like scholarships or grants. Then, consider how much of the remaining money you'll need to take out in loans to afford the cost of school."
How do the best private student loan rates compare with other loan rates?
Sean August:
"The best private student loans should have lower interest rates compared to credit cards and personal loans. Competitive interest rates will ensure that you don't pay more than you need to over the life of your loan."
Ryan Wangman:
"The best private student loans will have rates in the single digits, especially for borrowers with great credit. Rates on student loans are usually lower than the rates on credit cards or personal loans."
Why You Should Trust Us: How We Picked the Best Private Student Loans
We rate all student loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others. They are:
- Interest rate (20% of rating)
- Fees (20% of rating)
- Term lengths (15% of rating)
- Repayment options while in school (15% of rating)
- Borrower accessibility (15% of rating)
- Customer support (7.5% of rating)
- Ethics (7.5% of rating)
Each category's weighting is determined based on its importance to your borrowing experience. Rates and fees have the most significant impact on the total cost of your loan, so we weigh those the most heavily. Customer support and ethics are still crucial parts of the borrowing experience, but do not directly tie to a student loan's terms, so they have less of an impact on the overall rating.
Read more about how we rate student loans »
Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations, terms and conditions may apply for Ascent's Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates displayed above are effective as of 8/12/2024 and reflect an Automatic Payment Discount of 0.25% for credit-based college student loans and 1.00% discount on outcomes-based loans when you enroll in automatic payments. The Full P&I (Immediate) Repayment option is only available for college loans (except for outcomes-based loans) originated on or after June 3, 2024. For more information, see repayment examples or review the Ascent Student Loans Terms and Conditions. The final amount approved depends on the borrower's credit history, verifiable cost of attendance as certified by an eligible school, and is subject to credit approval and verification of application information. Lowest interest rates require full principal and interest (Immediate) payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the examples above, based on the amount of time you spend in school and any grace period you have before repayment begins. 1% Cash Back Graduation Reward subject to terms and conditions. For details on Ascent borrower benefits, visit AscentFunding.com/BorrowerBenefits. The AscentUP platform is only available to eligible Ascent borrowers and subject to terms and conditions.
