If you need to secure funding for college, you have two options: federal and private student loans. Federal student loans have better borrower protections and forgiveness options. Private student loans must be paid back in full.
Why would anyone use private student loans then? There are three good reasons:
- Private student loans offer you a lower interest rate. Grad PLUS and Parent PLUS federal loans have a 4.23% origination fee and a 6.28% interest rate. If you know you need to pay your debt off someday, you might choose a private student loan over a federal one if the private lender offered a lower interest rate.
- You’re unable to secure federal student loans. Undergraduates can only borrow $5,500 to $7,500 per year as a dependent student. If your parents are unable or unwilling to get a Parent PLUS loan to cover extra costs, then you might have to turn to private loans. Another example would be international students or DACA recipients. These students typically can’t get federal student loans but may qualify for private student loans with a cosigner.
- You made a mistake with financial aid. Unfortunately, many students and their families simply fail to fill out the FAFSA on time. This sometimes results in rushed decisions where a student needs thousands of dollars to pay tuition by the deadline in a hurry. If your only alternative is dropping out or skipping the semester, private student loans can be a better alternative since students who don’t complete their degrees are three times as likely to default and unable to pay back their debt.
In this guide, we’ll go over all of the private student loan options available so you can find the best deal if you fall into one of these three categories.
We list the best converting student loan companies at the top if you want to apply to only a few lenders. Otherwise, read the full page for our list of nine.
- Variable
1.13% – 11.23% APR¹ - Fixed
4.25% – 12.59% APR¹ - No origination fee
- Competitive rates
- Variable
1.30% – 11.69% APR - Fixed
3.74% – 13.03% APR - No origination fee
- Check rates in 2 min
- Variable
1.82% – 11.32% APR - Fixed
3.27% – 12.46% APR - No origination fee
- Large autopay discount
- Variable
1.24% – 11.99% APR² - Fixed
4.24% – 12.49% APR² - No origination fee
- Flexible in-school terms
1Sallie Mae Disclosures 2Discover Disclosures: Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
Student Loan Planner® may earn money if you get a private student loan through our referral links. However, we review each lending partner in detail before listing them on the site.
Here’s how we determine what lenders to feature and where:
- How many readers successfully financed with this lender in the past few months? If a high percentage of the people who apply through our site accept a loan, it tells us which lenders are doing a good job and which aren’t.
- What are we hearing from applicants? We look at weekly reader feedback and data from annual surveys we conduct. Our readers’ feedback on a lender’s website, the application process, and rates must be excellent to receive prominent placement.
- How much does a lender pay us? It takes a lot of work to put together lender reviews, do due diligence, and put out free content to make sure you don’t take out private student loans without knowing exactly why you’re making that choice instead of federal student loans (which we generally recommend prioritizing). What a lender pays us can influence where and how we list them on this post. However, it’s not the primary ranking factor.
1. Private student loans for the 2021-2022 school year 2. Are private loans right for me? 3. All 9 private student loan companies compared 4. FAQs 5. Start applying or ask a question
Private student loans for the 2021-2022 school year
For all federal student loans issued between July 1, 2021 and June 30, 2022, the interest rates will be:
- Direct Subsidized: 3.73%
- Direct Unsubsidized: 5.28%
- Direct Grad PLUS / Parent PLUS: 6.28%
The federal student loan interest rates this year are higher than last year’s, but they’re still near all-time lows. That means for the 2021-2022 school year, only the highest qualified borrowers with a cosigner can expect to get a lower interest rate than what’s offered by federal student loans.
Private student loans should generally be your last option
That means most borrowers taking out a loan with a private lender for the 2021-2022 school year are doing so because they can’t access federal loans or they made a mistake with the FAFSA.
It doesn’t hurt to apply and double-check that you can’t find a better rate than what’s available with federal student loans. That said, your first priority must be obtaining all of the student loans you can get from the government.
Some private lenders offer interest rates higher than 8%. If that’s all that you’re offered, you wouldn’t accept it unless you didn’t have another option to maintain progress toward your degree.
Are private loans right for me?
We generally recommend maxing out your federal student loan options first. Federal student loans have repayment plans that can be based on your income. But that’s something you won’t find with a student loan lender.
However, federal loans have limits on how much you can borrow. Your federal loan might not be enough to cover the cost of going to school. And that’s where private loans can help.
Many private lenders let you borrow up to 100% of the cost of attendance. So if you’ve exhausted your federal lending options, taking out a private loan can give you more funding to pay for your education.
Depending on the lender, you may have several options to repay your loan. For instance, some lenders let you make interest-only payments while you’re in school. Others won’t ask for any payments at all until after you graduate.
All 9 private student loan companies compared
Visit Sallie Mae
Sallie Mae: Best for one-stop shopping
- Positives: Lends at most accredited degree programs in US
- Origination fee: None
- Interest rates: Fixed starting at 4.25% APR. Variable starting at 1.13% APR
The variety of loan options and flexible terms make Sallie Mae the top private lender for Student Loan Planner® readers. You'll get bonus perks with a Smart Option Student Loan for undergrads, and there's no origination fee or prepayment penalty. Sallie Mae doesn't do pre-approval and only shows you available rates after performing a hard credit check. See disclosures.
Our rating: 4.5 / 5.0 Visit Earnest
Earnest: Best for fast application and approval
- Positives: Ease of application, ability to skip one payment a year
- Origination fee: None
- Interest rates: Fixed starting at 3.74% APR, variable starting at 1.30% APR
Payment flexibility and consistently low rates make Earnest a favorite among Student Loan Planner® readers for private student loans. On top of that, Earnest services its own loans. Earnest has several repayment options and lets you skip a payment once a year, in addition to offering a 9 month grace period after graduation, which is 3 months longer than most other lenders.
Our rating: 4.5 / 5.0 
Visit Ascent
Ascent: Great for student loans without a cosigner
- Positives: Offers non-cosigned starting junior year
- Origination fee: None
- Interest rates: Fixed starting at 3.27% APR. Variable starting at 1.82% APR
Ascent has three options for student loan borrowers, including cosigned loans, non-cosigned loans, and future income-based options. They have fewer repayment term lengths than other lenders, but the autopay discounts can be more generous. You can get 1% cash back incentive when you graduate and a 2% interest rate discount on a future income-based loan with autopay.
Our rating: 4.5 / 5.0 
Visit College Ave
College Ave: Low rates and flexible options
- Positives: Offers many different repayment terms
- Origination fee: None
- Interest rates: Fixed starting at 3.34% APR. Variable starting at 1.04% APR
College Ave has several loan options available for just about everyone, from undergrads and grad students to parents. Their customer service is excellent, and College Ave was rated "easy to work with" in a Student Loan Planner® Survey. College Ave also offers more repayment options and terms than most private lenders.
Our rating: 4.5 / 5.0 
Visit Citizens Bank
Citizens Bank: Best for international students
- Positives: Multi-year approval, international student focus
- Origination fee: None
- Interest rates: Fixed starting at 4.24% APR. Variable starting at 1.68% APR.
Citizens Bank is a good option for borrowers with a cosigner. They offer student loans to undergraduates with a minimum amount of $1,000 and a maximum of $150,000. Parents can borrow student loans for their child’s education up to $350,000. Where we see Citizens Bank perform the strongest is with international students, who must have a US citizen or permanent resident cosigner to be approved.
Our rating: 4.0 / 5.0 Visit Discover
Discover: Great choice for in-school payment flexibilty
- Positives: Earn cash rewards for good grades
- Origination fee: None
- Interest rates: Fixed 4.24% – 12.99% APR, Variable 1.24% – 11.99% APR
Discover offers private student loans without upfront fees you might see with other lenders. We've seen Discover be more accommodating to borrowers but also charge relatively high interest rates. In addition to loans for undergrads, grads, and parents, they also offer student loan solutions for MBA, health professions, law, residency and bar exam expenses.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. View full disclosure.
Our rating: 4.0 / 5.0 
Visit Funding U
Funding U: Best for no-cosigner undergrad loans
- Positives: Earn cash rewards for good grades and graduation
- Origination fee: None
- Interest rates: 7.49% to 12.99% APR
Funding U has one of the highest rates of approving borrowers who do not have a cosigner, with a focus on the undergrad market. However, their minimum interest rates reflect the lax policy towards needing a cosigner, as they are higher than other lenders. Also, they don't currently lend to graduate students.
Our rating: 3.5 / 5.0 
Visit CommonBond
CommonBond: Best for borrowing high loan amounts
- Positives: Offers fixed, interest-only, or full monthly payments
- Origination fee: 0% to 2%
- Interest rates: Fixed starting at 3.74% APR. Variable starting at 3.80% APR
CommonBond can lend more than most other private lenders, up to the full cost of attendance. They have a heavy focus on graduate and professional students, such as dental, medical, and law school programs. However, some of these specialty graduate loans come with a 2% origination fee. CommonBond also covers the cost of a child's education in the developing world for each loan funded. See disclosures.
Our rating: 3.5 / 5.0 
Visit Brazos
Brazos: Best for students with parents who live in Texas
- Positives: 40 years of experience, nonprofit status.
- Origination fee: None
- Interest rates: Fixed starting at 2.95% APR. Variable starting at 0.94% APR.
Brazos is a nonprofit lender only available to residents of Texas. If you're a parent, family member or friend who wants to help pay for a student's education, Brazos has low rates and zero upfront fees. Their rates can be very low but you'll need to patiently go through their application process as it's not as slick as some other lenders on this page.
Our rating: 3.5 / 5.0
FAQs
Here’s a list of some of the most common questions we get from readers who are thinking about taking out a private student loan.
If you have a question that isn’t listed here, we’d love to hear it! Just comment on this post below.
What is the difference between federal and private student loans?
The biggest difference between federal and private student loans is who provides them. While federal student loans are administered by the federal government, private student loans come from banks, credit unions and other financial institutions. Interest rates and repayment options can vary greatly, so make sure you understand the difference before applying.
How can I apply for a private student loan?
After submitting your Free Application for Federal Student Aid (FAFSA), you may not have enough to cover all of your educational costs. That’s where private student loans come in. Choose a bank, credit union or online lender and submit an application. You may need to provide your tax returns, pay stubs or other personal information. The lender may also require a cosigner as part of your application.
Can I get a private student loan without a cosigner?
Yes! Private loan lenders use your credit history to determine your eligibility, but there are non-cosigned options if you have no credit or poor credit. Here’s our list of lenders that offer private student loans without a cosigner.
Do private student loans have a cap on how much I can borrow?
Federal student loans have stricter limits on how much you can borrow, but some private lenders put a cap on the loan amount, too. In most cases, private student loans let you borrow up to the cost of attendance, which can include tuition, fees, books, supplies and living expenses.
When should I apply for a private student loan?
It’s best to exhaust all of your grant, scholarship and federal student loan options before applying for a private student loan. Even with your financial aid award package, you might need private loans to bridge the gap and cover all of your educational costs.
What are the average interest rates on private student loans?
For students who have a well-off cosigner, we sometimes see private student loan interest fixed rates between 4% and 5%. However, most private student loan interest costs fall in the 6% to 10% range, which you would only select if that was your only choice.
Should you take 10 years to pay off your private student loan after graduation?
No, you should seek to refinance your private loans as soon as you graduate for a lower interest rate. There’s a better chance than not that you’ll lock in a lower interest cost.
Start applying or ask a question
Ready to take out a private student loan? Just click the links at the top of the page and get started.
If you’re an undergrad, try to get all of the federal loans you can. And only apply with a private company if you need to.
If you’re attending graduate or professional school, we offer a pre-debt consultation so you can be fully informed about your options going into your program. That way you don’t have to stress about what your financial life might look like after graduation.
Have a question? Go ahead and ask in the comments below. Many readers have extra questions because of the economic volatility out there.
The more details you give, the better answer we can supply. Also, use the comments to ask any lender specific questions. Or feel free to share your experience with taking out private loans.