Best Private Student Loans

Best Private Student Loans

The best private student loans can bridge the gap between what a student can get in federal financial aid and scholarships, and the cost of school. Unlike in the past, when going to college was not necessarily always required, today more and more people are choosing to go to college for a degree or career advancement. In fact, over 19 million people in the U.S. alone attended college in the Fall of 2020. Even many entry-level positions require a college education. Another fact that has changed through the years is the price of a college degree.

Without the help of scholarships, grants, financial aid, and student loans, many students would not be able to get a college education. However, sometimes even with the help of scholarships, grants, and financial aid students are still unable to pay the high price of college. Many students find themselves applying for private student loans.

What is a Private Student Loan?

Private student loans are what their title implies. They are loans that students take out to help pay for the cost of college. Unlike federal student loans that come from the federal government, private student loans come from private institutions, such as credit unions, banks, or even online lenders. They’re generally used to pay the amount left over after the federal student loans, grants, and scholarships have paid all they will pay. Applicants must also meet certain requirements to be eligible for a private student loan.

How Do Private Student Loans Differ from Federal Loans?

Private student loans differ from federal loans in a few different ways. The biggest difference is that private student loans come from private lending institutions and not the federal government. They are generally used as a last resort and only to cover the payment gap after maxing out federal loans and other financial options.

Students applying for private student loans may have to have a co-signer and/or have some sort of credit history because most private school loans are approved based on credit history. Students also typically pay lower interest rates with federal student loans. However, a student may get a lower interest rate if the student has very good credit or possibly higher with bad credit. Federal student loans also offer more flexible repayment options, some of which might even include forgiveness opportunities.

Although students submit a Federal Application for Federal Student Aid (FAFSA) when applying for a federal student loan, they are not required to for a private student loan. However, many students choose to submit the application. The amount you can borrow differs between private student loans and federal student loans.

When borrowing from a federal student loan, the maximum amount students can get is $12,500 per year for undergraduates and $20,500 per year for graduate students. The total amount a student can get in federal student loans is $57,500 for undergraduates and $138,500 for graduate students.

Private student loans, on the other hand, will generally only offer an amount that covers the school’s cost of attendance, after financial aid has been paid. It works in the same way as gap insurance. However, lenders may also vary in what the maximum amount is that they’ll borrow to students.

The amount of time students will have to pay back their student loans also varies. Federal student loans are usually required to be paid back in ten years. Some of the best private student loans may need to be paid in ten years, while others may have loan terms that range from five to 20 years. The requirements of repaying private student loans can vary from one lender to another.

One might allow you to defer or postpone payments until you’re done with college, while others may require you to make fixed payments while you’re still in college. There are also other lenders that will require students to make interest-only payments while they’re still in school. Most students have six months after graduation before they have to start paying the loan.

One thing students must realize is that interest is added to the loan daily. When students choose to defer their payments until after graduation, the interest is still accumulating daily. Once the student graduates, he or she will have to pay not only the amount they borrowed but also the interest.

Do I Need Good Credit to Get a Private Student Loan?

Students applying for private student loans should have a good credit score. Many lenders may also require a co-signer, especially if the student has a low credit score or no credit history. It’s not unusual for a student to have no credit history if they’re still in high school or have just graduated. A student may still get a private school loan even if they have poor credit if their co-signor has good credit scores.

Typically, the higher the credit scores the lower the interest rates. Credit score requirements can also vary from one lender to another, but most like to see credit scores of 600 or higher. Applicants, either the student or the co-signer, will also be required to meet income requirements so the lender knows the individual is able to pay off the loan. Here is a list of the top best private student loans.

20 Different Private Student Loans

1. College Ave

Company: Founded in 2014, College Ave is an online lender that provides students with student loans. In addition to offering loans to undergraduate and graduate students, they also offer student loan refinancing as well as parent loans.

APR: Fixed APR 2.94 and 12.99 percent; Variable APR 0.94 to 11.98 percent.

Credit Rating Needed: They prefer FICO scores in the mid-600s.

Other Info or Terms: They offer flexible repayment terms, no pre-payment penalty and zero fees; terms of five, eight, ten, and 15 years

2. Ascent

Company: Founded in 2015, Ascent is an online lender that offers co-signed student loans to both undergraduate and graduate students in more than 2,200 colleges across the nation. They also offer student loans to students that are not permanent residents or U.S. citizens.

APR: Fixed APR is 3.44 to 11.71 percent; Variable APR is 1.47 to 9.05 percent.

Credit Rating Needed: Ascent requires FICO credit scores to be at least 540.

Other info or terms: Ascent has loan packages for Dental School, Law School, Medical School, MBA, and International students.

3. CommonBond

Company: Founded in 2012, CommonBond is a lender that offers student loans to undergraduate, graduate, MBA, dental, and medical students as well as refinancing student loans. They have paid student loans totally more than $2 billion.

APR: Fixed APR is 3.74 to 10.74 percent; Variable APR of 3.79 to 9.35 percent

Credit Rating Needed: CommonBond requires a FICO credit score of 640 or higher.

Other info or terms: They offer flexible payment terms with no application, prepayment, or origination fees.

4. LendKey

Company: Originating in 2009, LendKey is a digital platform that connects students and co-signers in need of student loans or refinancing loans with community banks and credit unions.

APR: Fixed APR of 4.25 to 12.59; Variable APR of 1.13 to 11.23 percent

Credit Rating Needed: LendKey prefers a FICO credit score of at least 660.

Other info or terms: They provide funding and refinancing loans for both undergraduate and graduate students as well as students in medical, law, and MBA students.

5. Sallie Mae

Company: Sallie Mae is a lender that offers private student loans to undergraduate and graduate students. They also have loan packages for students in medical, law, dental, and MBA programs.

APR: Fixed APR of 3.50 to 12.60 percent; Variable APR of 1.13 to 11.23 percent

Credit Rating Needed: They prefer a FICO score of at least the mid-600s.

Other info or terms: They offer competitive rates, have no origination or prepayment fees, and offer several convenient payment options.

6. Discover

Company: Discover Student Loan, a part of the Discover Bank credit card company, was started in 2007. They will borrow from $1,000 to up to 100 percent of college fees.

APR: Determined after a soft credit check

Credit Rating Needed: Will be determined at the time of application

Other info or terms: Discover student loans are best used by students who need flexibility in their loan terms. They also charge no late, origination, prepayment or application fees. Undergraduates have up to 15 years to repay the loan; graduate students have up to 20 years.

7. SoFi

Company: SoFi is a lending institution that offers student loans to undergraduate, graduate, MBA, and Law students and their co-signers. They also offer parent loans.

APR: Fixed APR of 3.22 to 11.16 percent; Variable APR of 1.10 to 11.68 percent (both with autopay) for undergraduate students; Fixed APR of 4.13 to 11.06 percent; Variable APR of 1.95 to 11.06 percent for graduate students

Credit Rating Needed: SoFi requires a FICO score of at least 660

Other info or terms: They offer flexible repayment options and charge zero fees as well as a six-month grace period after graduation.

8. Earnest

Company: Made up of a group of professionals in various careers, Earnest offers private student loans to undergraduate and graduate students and co-signers. They also offer refinancing and consolidation loans.

APR: Fixed APR of 3.19 to13.03 percent; Variable APR of 1.19 to 11.69 percent (0.25percent with autopay)

Credit Rating Needed: Requires FICO score of 650 or more

Other info or terms: Students can pick their payment and loan term; loan terms of five, seven, ten, 12, and 15 years

9. CommonBond

Company: CommonBond is a lender that offers private student loans to undergraduate students.

APR: Fixed APR of 3.74 to 10.74 percent; Variable APR of 3.79 to 9.35 percent

Credit Rating Needed: Requires FICO score of 660 or more

Other info or terms: Offer friendly and convenient payment options; Interest rates based on application, credit history, and loan term chosen

10. Custom Choice

Company: Custom Choice is a lending institution that provides student loans to eligible students and co-signers.

APR: Fixed APR of 3.20 to 10.77 percent; Variable APR of 1.03 to 9.67 percent

Credit Rating Needed: Requires FICO score of at least 660

Other info or terms: They offer various payment options with a 25 percent discount on payments if made with autopay. Students can pre-qualify with no effect on credit.

11. Education Loan Finance

Company: Education Loan Finance offers student loans to undergraduates, graduates, and parents.

APR: Fixed APR of 3.20 to 11.99 percent; Variable APR of 1.20 to 11.52 percent

Credit Rating Needed: Requires FICO score of at least 680

Other info or terms: Students must meet eligibility requirements. There are no fees of any kind. Applicants must meet income requirements.

12. Funding U

Company: Funding U offers student loans to undergraduate and graduate students.

APR: Funding U offers a fixed APR of 7.49 to 12.99 percent so the initial rate will never increase.

Credit Rating Needed: There is no specific credit score required.

Other info or terms: There are no hidden fees, and students do not need a co-signer.

13. MPower Financing

Company: MPower Financing is a lender that offers private student loans to undergraduate students or graduate students that will graduate within two years. Their loans require no collateral or cosigners.

APR: Fixed APR of 7.52 to 14.98 percent

Credit Rating Needed: They do not have a credit score requirement.

Other info or terms: They offer interest-only payments while the student is in school. They offer flexible loan terms.

14. ISL Education Lending

Company: ISL Education Lending is a not-for-profit company that offers private student loans that are student-friendly. They also offer refinancing options. They offer loan amounts from $1,000 to $300,000.

APR: Fixed APR of 4.60 to 7.40 percent; Variable APR of 3.51 to 6.14 percent

Credit Rating Needed: Requires FICO score of 670 or higher

Other info or terms: They have no fees of any kind and offer loan terms of five, ten, 15, and 20 years.

15. Advantage Education

Company: Advantage Education is a lending company that offers private student loans and is a great choice for part-time students.

APR: Fixed APR of 3.75 to 6.99 percent

Credit Rating Needed: Required FICO score depends on application and loan

Other info or terms: no fees of any kind; generous forbearance policy

16. Credible

Company: Credible is a lending company comprised of several professionals who work alongside several banks with the goal of providing affordable student loans for college students. They offer loans to undergraduate, graduate, MBA, law, medical, and parent loans.

APR: Fixed APR of 2.94 to 13.16 percent; Variable APR of 0.94 to 11.98 percent

Credit Rating Needed: Can vary and typically not disclosed

Other info or terms: Students can choose their loan due date, loan term length, and loan rate. Multiple prepayment options with no fees.

17. PNC Bank

Company: PNC Bank is a lender that offers student loans to undergraduate and graduate students as well as medical, law, healthcare, and residency loans. The offer students from $1,000 to $50,000.

APR: Fixed APR of 2.99 to 9.89 percent; Variable APR of 1.09 to 8.19 percent

Credit Rating Needed: Not disclosed but a discount applies with autopay

Other info or terms: loan terms of five, 10, or 15 years with flexible payment options

18. Citizens Bank

Company: Citizens Bank offers a variety of student loans for undergraduate, graduate, medical, law, dental, MBA, and parent loans. They borrow from $1,000 to $350,000.

APR: Fixed APR of 3.23 to 1.95 percent; students can get loyalty and an autopay discount

Credit Rating Needed: not disclosed

Other info or terms: loans available for five, ten, and 15 years

19. Sparrow

Company: Sparrow is a lending institution that collaborates with several other banks to provide student loans to eligible undergraduate and graduate students.

APR: Fixed APR of 2.99 to 14.98 percent; Variable APR of .99 to 12.99

Credit Rating Needed: not disclosed

Other info or terms: loan terms of five, seven, eight, ten, 12, 15, or 20 years

20. Rhode Island Student Loan Authority

Company: Although located in Rhode Island, this lending institution offers private student loans to students nationwide. They’ll borrow from $1,500 to $45,000 per year.

APR: Fixed APR of 2.99 to 4.74 percent

Credit Rating Needed: not disclosed

Other info or terms: loan terms of 10 or 15 years; applicants or co-signers must meet income requirements

Final Thoughts

When you are looking for the best private student loans, make sure you pay attention to the terms, fully understand your rate and what you are getting into, and good luck!

Additional Private Student Loan Companies
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