8 Best Private Student Loans — Objectively Reviewed

·16 min read
best private student loans
best private student loans

Content provided by Credible. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

This article first appeared on the Credible blog.

If you’ve exhausted grant, scholarship, and federal student loan options, private student loans might be a good way to fill financial gaps when paying for college.

To find the best private student loan for your needs, it’s important to compare as many lender options as you can. Through Credible, you can compare your prequalified private student loan rates without affecting your credit score.

Credible’s private student loan partners

No two student loan lenders are exactly the same. Each offers unique interest rates, terms, limits, and more. Here are some of the most important details about the loans offered by Credible’s top student loan lenders, including special interest rate discounts, policies regarding cosigner release, and loan servicer.

1. Ascent

Best for: Discounts

Ascent offers two private student loans worth considering:

  • Ascent Tuition Loan: Offers competitive rates to borrowers who have a cosigner

  • Ascent Independent Loan: Offers more flexible eligibility for borrowers who don’t have a cosigner

Pros

  • 1% cash back graduation reward, and 0.25% to 1.00% autopay discount

  • Borrow up to school’s cost of attendance ($200,000 cap)

  • No application, origination, or disbursement fees

  • Cosigner release available after 24 consecutive on-time payments

Cons

  • Limited selection of repayment terms

  • Ascent Independent loan available only to juniors, seniors, and grad students

  • Deferred repayment is the only repayment option for Ascent Independent Loan

2. Citizens

Best for: Borrowers earning graduate or professional degrees

Citizens offers student loans not only to undergraduate and graduate students, but parents taking out loans for their child’s education. Additionally, students studying in certain fields — such as law, business, and healthcare — can access loans specifically tailored to them through Citizens.

Pros

  • 0.25% automatic payment discount and 0.25% loyalty discount

  • No application, origination, or disbursement fees

  • Borrow up to school’s cost of attendance with $150,000 cap for undergraduate and graduate degrees; $225,000 for MBA and law degrees; $350,000 medical school and parent loans

  • Student and parent loans available

Cons

  • Only offers 12 months of forbearance

  • Doesn’t disclose minimum income requirements

3. College Ave

Best for: Flexible repayment options

College Ave is an online lender with a simplified online application and approval process. With College Ave, you can borrow $1,000 up to your school-certified cost of attendance (minus any other financial aid you’ve received).

Additionally, you can choose from a variety of loan terms ranging from five to 15 years (depending on your degree type).

Pros

  • 0.25% autopay discount

  • Borrow up to 100% of the school-certified cost of attendance

  • Wide selection of repayment terms

  • No application, origination, or disbursement fees

Cons

  • Cosigner release not available until at least half of the scheduled repayment term has been completed

  • Doesn’t disclose minimum income or credit requirements

4. Custom Choice

Best for: Past-due education balances

The Custom Choice Loan is available from $1,000 to $99,999 annually ($180,000 aggregate limit) with a three- or five-year term. If you graduate with at least a bachelor’s degree, you could get a 2% principal reduction on your loan.

Pros

  • 0.25% autopay discount

  • 2% principal reduction if you graduate with at least a bachelor’s degree

  • Can use loan funds to cover past-due balances

Cons

  • Doesn’t disclose minimum income requirements

  • Limited repayment terms (only three or five years)

  • Not available in Arizona, Iowa, or Wisconsin

5. EDvestinU

Best for: Borrowers with good credit

EDvestinU offers private student loans to undergraduate and graduate students with no fees and a wide selection of repayment terms. Additionally, you could get 0.50% off your rate if you sign up for automatic payments – more than the 0.25% discount that most other lenders offer.

Pros

  • 0.50% autopay discount

  • Borrow up to 100% of school-certified cost of attendance with $200,000 cap

  • No application, origination, or disbursement fees

  • Wide selection of repayment terms

  • Cosigner release available after 36 months of on-time payments

Cons

  • Borrower or cosigner must have a minimum income of $30,000

  • Borrower or cosigner need higher credit score to qualify (750)

6. INvestEd

Best for: Indiana residents

INvestEd offers private student loans to students living in or attending school in Indiana. With INvestEd, you can borrow $1,001 up to 100% of your cost of attendance (minus any other financial aid you’ve received) with terms ranging from five to 15 years.

Additionally, you could get a 2% principal reduction if you graduate within six years.

Pros

  • 0.25% autopay discount

  • No application, origination, or disbursement fees

  • Borrow up to 100% of school certified cost of attendance ($200,000 cap)

Cons

Only available to Indiana residents or students attending an Indiana school

Cosigner release available only after 48 consecutive monthly principal and interest payments

7. MEFA

Best for: Borrowers who prefer fixed-rate loans

The Massachusetts Educational Financing Authority (MEFA) offers fixed-rate private student loans to both undergraduates and graduate students across the U.S.

Keep in mind that you’ll need to be enrolled at a public or nonprofit school to take out a loan with MEFA — for-profit schools aren’t eligible.

Pros

  • Fixed rates mean stable monthly payment and repayment costs

  • Borrow up to 100% of school certified cost of attendance

  • No application, origination, or disbursement fees

  • Cosigner release available after 48 consecutive on-time payments

Cons

  • Variable-rate loans not offered

  • 15-year repayment term is the only option for grad students

8. Sallie Mae

Best for: Cosigner release

Sallie Mae offers a range of private student loans with no fees to students and parents as well as medical, dental residency, and bar study loans. You can borrow $1,000 up to 100% of your school-certified cost of attendance (minus any other financial aid you’ve received).

Additionally, borrowers who have a cosigner can apply for cosigner release after just 12 months of consecutive on-time payments.

Pros

  • 0.25% autopay discount

  • Borrow up to 100% of the school-certified cost of attendance

  • No application, origination, or disbursement fees

  • Cosigner release available after making 12 on-time principal and interest payments

Cons

  • Only offers 12 months of forbearance

  • Doesn’t disclose minimum income or credit requirements

Credible makes it easy to compare private student loan rates from multiple lenders in minutes. And seeing your prequalified rates through Credible won’t affect your credit score.

Methodology

To find the “best companies,” Credible looked at loan and lender data points from 10 categories to give you a well-rounded perspective on each of our partner lenders. Here’s what was considered:

  • Interest rates

  • Repayment terms

  • Repayment options

  • Fees

  • Discounts

  • Customer service availability

  • Eligibility criteria

  • Cosigner release options

  • Whether the minimum credit score is available publicly

  • Whether consumers could request rates with a soft credit check

Credible does not sell your data and only gets paid by the lender if you finish the loan process and a loan is disbursed. Additionally, Credible charges you no fees of any kind to compare your loan options.

Other private student loan lenders to consider

Here are more private student loan companies evaluated. Keep in mind that these lenders are not offered through Credible, so you won’t be able to easily compare your rates with them on the Credible platform like you can our partner lenders.

How do I apply for a private student loan?

If you’re ready to apply for a private student loan, follow these three steps:

  1. Fill out the FAFSA and accept federal student loans. Your first step should be completing the Free Application for Federal Student Aid (FAFSA). Afterward, your school will send you a financial aid award letter detailing what federal student loans and other financial aid you qualify for. You can then choose which aid you’d like to accept.

  2. Apply for scholarships and grants. Unlike student loans, college scholarships and grants don’t have to be repaid — which essentially makes them free money for school. There’s no limit on how many scholarships and grants you can get, so it’s a good idea to apply for as many as you might be eligible for. Additionally, your FAFSA results might qualify you for school-based scholarships or grants.

  3. Use private student loans to fill the gaps. After you’ve exhausted your scholarship, grant, and federal student loan options, private student loans can help fill any financial gaps left over. Be sure to shop around and compare as many private lenders as you can to find the loan for you — consider not only interest rates but also repayment terms and any fees charged by the lender.

If you decide to take out student loans — whether federal or private — to pay for school, it’s important to consider how much those loans will cost you in the future. This way, you can prepare for any added expenses.

You can find out how much you’ll owe over the life of your federal or private student loans using a student loan calculator.

Student loan interest rates

Student loan interest rates vary depending on the type of student loan you get. Here’s how they work:

  • Federal student loan interest rates are fixed rates set by Congress. Your rate on a federal student loan will depend on the type of federal loan you take out as well as your dependency status and year in school.

  • Private student loan interest rates can be fixed or variable and will depend on your credit and repayment term. In general, the better your credit, the lower the interest rate you’re likely to get.

Fixed rates vs. variable rates: What does this mean?

There are two types of student loan interest rates available:

  • Fixed rates remain the same throughout the life of the loan. This means your monthly payment won’t ever change. All federal student loans and many private student loan options come with fixed rates.

  • Variable rates can fluctuate over time according to market trends. This means your monthly payment might go up in the future. Variable rates are available for private student loans — though keep in mind that some private lenders don’t offer variable rates.

Which rate should I choose? If you’re deciding between a fixed- or variable-rate student loan, keep in mind that the right type of interest rate for you depends on your financial needs and goals. For example, if you want your payment to stay the same so you can easily budget for it, then a fixed rate could be the right choice. But if you plan to pay off your loan early and want to avoid interest charges, then a variable rate might be the better option.

Frequently asked questions about private student loans

What are the different types of student loans?

You might come across several types of student loans, including:

  • Direct Subsidized Loans: These are available to undergraduate students with financial need. The government pays all interest that accrues on subsidized loans while you’re in school.

  • Direct Unsubsidized Loans: These are available to both undergraduate and graduate students, regardless of financial need. You’re responsible for all interest that accrues on unsubsidized loans.

  • Direct PLUS Loans: There are two kinds of PLUS Loan — Grad PLUS Loans for grad students and Parent PLUS Loans for parents who want to fund their child’s education. Unlike most federal student loans, PLUS Loans require a credit check.

  • Private student loans: These loans are offered by private lenders and can be used for a wide variety of educational expenses. Some lenders also provide private loans specifically designed for certain programs — such as student loans for law school, bar exam studies, MBAs, or medical school.

How do you pick the best student loan?

To pick the best student loan for your needs, it’s important to take the time to consider as many options as possible. It’s usually a good idea to start with federal student loans since they come with federal benefits and protections. Then you can use private student loans to fill any gaps left over.

Here are several important factors to keep in mind as you weigh your options:

  • Interest rates: Your interest rate will be one of the biggest components to determine how much you actually pay for a student loan. In general, the lower your rate, the less you’ll pay overall. Note that federal student loans come with fixed rates that are set by Congress while private student loan rates depend on the lender as well as other factors like your credit and the repayment term you choose.

  • Repayment terms: Most federal student loans are automatically placed on the standard 10-year repayment plan — however, you might be able to extend your term up to 25 or 30 years if you sign up for an income-driven repayment plan or consolidate your loans. Private student loan terms generally range from five to 20 years, depending on the lender. It’s usually best to choose the shortest term you can afford to keep your interest costs as low as possible.

  • Loan amounts: With most federal student loans, the amount you can borrow will depend on the type of loan you get as well as your year in school. But with a Direct PLUS Loan or private student loan, you might be able to borrow up to your school’s cost of attendance.

  • Discounts: Many servicers and lenders offer discounts that can help you save money on your loan. For example, you might qualify for a rate discount if you sign up for automatic payments.

  • Fees: Some student loans come with fees that could increase your overall loan cost. For example, federal student loans charge a disbursement fee that’s deducted from your loan before you get your funds. Private student loans can also have fees (such as origination fees), depending on the lender. Keep in mind that if you take out a private student loan with a Credible partner lender, you won’t have to worry about application, origination, or disbursement fees.

Do private student loans affect financial aid?

No, taking out a private student loan won’t affect your financial aid package — though how much you can borrow with a private student loan could be impacted by how much federal financial aid you’ve already received.

Your school will use your FAFSA results to determine what federal student loans and other financial aid you’re eligible for. How much aid you receive will depend on your:

  • Expected family contribution

  • Cost of attendance

  • Dependency status

  • Year in school

Your private student loans aren’t part of the financial aid calculations.

Do I need a cosigner for a student loan?

This depends on the type of student loan you want to get as well as on your credit.

  • Federal student loans: Most federal student loans — including both Direct and Unsubsidized Loans — don’t require a credit check or a cosigner. PLUS Loans, on the other hand, do. If you have any sort of adverse credit history, you might need an endorser (essentially the same as a cosigner) to apply with you.

  • Private student loans: You’ll need good to excellent credit as well as verifiable income to qualify for a private loan. If you aren’t eligible on your own, applying with a cosigner could improve your chances. In fact, most private loans are cosigned. Additionally, having a cosigner could get you a lower interest rate than you’d get on your own.

Can you get a student loan without a cosigner?

Yes, most federal student loans are available to borrowers without the need for a cosigner.

As for private student loans, you might get approved without a cosigner if you have decent credit and income. However, applying with a cosigner could help you get approved more easily, especially if you have poor or fair credit. You might even get a better interest rate by having a creditworthy cosigner.

What is the maximum amount of private student loans you can borrow?

The maximum amount you can borrow in private student loans depends on the lender. While some lenders have specific limits, others will allow you to borrow up to your cost of attendance (minus any other financial aid you’ve received).

Additionally, private student loans sometimes have different maximums depending on where you live and whether you’re applying with a cosigner.

With Credible, you can review rates from multiple lenders who offer loan amounts up to the cost of attendance.

What are the drawbacks of private loans?

Private student loans offer several benefits, such as being able to apply at any time as well as higher student loan limits compared to most federal student loans. But there are also drawbacks to keep in mind, including:

  • Lack of federal benefits: Private student loans don’t provide the protections of federal student loans, such as access to income-driven repayment plans and student loan forgiveness programs. Any assistance options — such as deferment or forbearance — are offered at the discretion of the lender.

  • Lack of repayment options: Private student loan repayment options are generally much more limited in comparison to federal loans. For example, private loans don’t offer the same income-driven repayment and extended repayment plans that federal loans do.

  • Immediate repayment might be required: Depending on the lender and repayment option you choose, you might have to begin repaying private student loans immediately — even when you’re in school.

Tip: If you need to borrow for school and are considering federal vs. private student loans, keep in mind that it’s usually a good idea to take out federal student loans first before turning to private loans.

Can you live off student loans?

Yes, you can use federal and private student loans to cover living expenses — such as college housing and groceries — while you’re enrolled in school.

Just keep in mind that that amount you can borrow is based on your school’s cost of attendance, which could limit how much you have left over to use for living expenses.

Do private student loans affect credit score?

When you apply for a private student loan, the lender will perform a hard credit check to determine your creditworthiness. This could cause a slight drop in your credit score — however, this effect is usually only temporary, and your score will likely bounce back within a few months.

Additionally, private student loans are reported to the credit bureaus. If you make on-time payments on your loan, you could see your credit improve over time. But if you miss payments or default on the loan, it could have a severely negative impact on your score.

Is a Parent PLUS Loan better than a private loan?

If you’re considering a Parent PLUS Loan vs. a private student loan, keep in mind that the right one for you will depend on your needs as well as your credit.

For example, a PLUS Loan might be better if you want a fixed rate as well as access to federal benefits and protections. But if you have excellent credit, you might qualify for a lower interest rate on a private loan than you’d get with a PLUS Loan.

Can I get a student loan with a 600 credit score?

If you have less-than-perfect credit, you might still qualify for either a federal or private student loan:

  • Federal student loans: Most federal loans don’t require a credit check, which could make them a good option if you have poor credit. While you’ll have to undergo a credit check to get a federal Direct PLUS Loan, this is only to make sure you don’t have an adverse credit history — no specific minimum credit score is necessary to qualify.

  • Private student loans: You’ll generally need good to excellent credit to get approved for a private loan. However, there are several private lenders that offer student loans for bad credit — though keep in mind that these loans typically come with higher interest rates compared to good credit loans. You could also consider applying with a cosigner to improve your chances of getting approved.

About the author: Emily Guy Birken started as a blogger-for-hire in 2010, during a brief pause from teaching high school English that became permanent. She has written about every money topic under the sun, from student loans to retirement, has been featured on Forbes, Kiplinger’s, Huffington Post, MSN Money, and The Washington Post online, and authored 5 books.