best private student loans' interest rates and other features to find the right fit. Forbes Advisor's list will help you decide."/>
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Private student loans are best used to pay college costs after you’ve borrowed the maximum you qualify for in both subsidized and unsubsidized federal student loans.
Private student loans come from banks, credit unions and online lenders, and unlike federal student loans for undergraduates, they require a credit check. That means most undergrads will need a co-signer in order to qualify. Private student loans also are more expensive than federal loans—especially now that federal loan rates are at historic lows—and typically don’t offer the flexible repayment options their federal counterparts do.
That’s why there is no five-star lender on our list of private student loans: In the vast majority of cases, the best college financing option is a federal student loan.
0.99% to 11.98%*
2.99% to 12.99%
College Ave offers a solid all-around private loan product with a few unique features. Borrowers can choose an eight-year term, which is in addition to the typical five-, 10- and 15-year terms many lenders provide. Borrowers can also access an extended six-month grace period beyond the initial payment-free six months allowed after separating from school.
Extra Details
Loan terms: 5, 8, 10 and 15 years
Loan amounts available: $1,000 up to the total cost of attendance
Eligibility: Applicants must have a minimum credit score in the mid-600s.
Forbearance options: Up to 12 months of forbearance is available, in three- to six-month increments
Co-signer release policy: Available after 24 payments
*Borrowers with a co-signer who choose the shortest repayment term available and who make full monthly payments while in school qualify for the lowest rates.
N/A
2.99% to 4.74%
Rhode Island Student Loan Authority, known as RISLA, is a nonprofit based in Rhode Island that lends to students across the country. It offers two different loan types for undergraduate students, which each come with their own fixed interest rates. One loan requires immediate repayment, and one lets you defer payments until six months after you leave school. Everyone who qualifies for each of the loan types gets the same rate, which makes it easy to compare RISLA loans with others you’ve qualified for.
For borrowers who struggle to afford their loan after graduating, RISLA is one of the only private lenders to offer an income-based repayment plan, which limits payments to 15% of income for a 25-year period.
RISLA was a winner of Forbes Advisor’s best private student loans of 2020 awards. Learn more here.
Extra Details
Loan terms: 10 or 15 years
Loan amounts available: $1,500 to $45,000 per year ($150,000 aggregate per borrower)
Eligibility: Applicants must show a minimum income of $40,000 per year and a minimum credit score of 680. Most undergraduate students will need a co-signer to qualify.
Forbearance options: Forbearance available for up to 24 months.
Co-signer release policy: Available after 24 months of payments. Periods during which borrowers use income-based repayment do not qualify.
1.50% - 11.33%*
2.97% - 12.95*
Ascent offers both co-signed and non-co-signed student loans, which gives borrowers without co-signers more college funding options. We scored the company based on its co-signed credit-based student loan for undergraduates.
Ascent stands out for its range of payment reduction and postponement options, rare among private lenders. Borrowers can choose a graduated repayment plan, which provides a lower monthly payment to start that increases over time. That can be useful for graduates just starting out, who will likely make more money as they move up in their careers.
Borrowers also can pause payments if they’re experiencing a temporary financial hardship for one to three months at a time, up to a maximum of 24 months total. (Taking this forbearance means you will repay the loan over a longer period, though.) Interest continues to accrue during forbearance, which is true for the vast majority of private student loans.
Ascent also offers a graduation reward of 1% of the loan’s original principal balance. Check the conditions you must satisfy to qualify.
Ascent was a winner of Forbes Advisor’s best private student loans of 2020 awards. Learn more here.
Extra Details
Loan terms: 5, 7, 10, 12 or 15 years
Loan amounts available: $2,001 up to total cost of attendance, to a maximum of $200,000 per academic year ($200,000 aggregate)
Eligibility: Student borrowers with no credit history can qualify with a creditworthy co-signer. Co-signers must show income of at least $24,000 for the current and previous year. Co-signers must have a minimum credit score of 660 if the student has a score of less than 700, and a minimum credit score of 620 if the student has a score of 700 or higher.*
Forbearance options: When experiencing financial hardship, borrowers can suspend payments for up to three months at a time, for a total of up to 24 months throughout the loan term. Only four rounds of forbearance (up to 12 months’ worth) may be taken consecutively.
Co-signer release policy: Available after 24 months of consecutive automatic debit payments, if the primary borrower meets certain credit score requirements.
*For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates are effective as of 10/01/2021 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate future income-based loans). For Ascent rates and repayment examples please visit: AscentStudentLoans.com/Rates . 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student borrowers must have a minimum credit score. The minimum score required is subject to change and may depend on the credit score of your cosigner.
SoFi is perhaps best known as a student loan refinance lender, but it also makes loans to undergraduates, graduate students, law and business students and parents. Its undergraduate student loan product offers mostly industry-standard features, plus a few perks: no late fees, an interest rate discount of 0.125% if your co-signer already uses another SoFi product and job search help through its career team.
Extra Details
Loan terms: 5, 10 and 15 years
Loan amounts available: $5,000 to total cost of attendance
Eligibility: Does not disclose credit score or income requirements
Forbearance options: SoFi offers a specific Unemployment Protection Program that allows borrowers to pause payments in three-month increments, for up to 12 months, if laid off from work. A separate forbearance program is also available for borrowers experiencing other types of economic hardship, such as medical expenses. Borrowers can take up to 12 months total forbearance, no matter which program they use.
Co-signer release policy: Available after 24 payments
N/A
7.53% to 8.85%
Similar to Funding U, borrowers qualify for A.M. Money loans based on their educational background and GPA, not their credit. The company does not allow co-signers. A.M. Money also stands out for the fact that it offers an income-based repayment plan for up to 36 months for borrowers who need it. The minimum monthly payment on the plan is $50.
A.M. Money charges a 4.5% origination fee, and unpaid loans go into default sooner than most other lenders: 14 days, unless otherwise specified by state law.
Extra Details
Loan term: 10 years
Loan amounts available: $2,001 to total cost of attendance, up to a $50,000 cap
Eligibility: The loan is merit-based, so it has no credit or income requirements. Students must attend one of several eligible schools, mostly located in the Midwest. But A.M. Money encourages prospective borrowers to apply even if their school isn’t yet listed.
Forbearance options: Up to 12 months of forbearance available. Borrowers can make income-based payments for up to 36 months.
Co-signer release policy: No co-signer required
0.99% to 11.98%*
2.99% to 12.99%
College Ave offers a solid all-around private loan product with a few unique features. Borrowers can choose an eight-year term, which is in addition to the typical five-, 10- and 15-year terms many lenders provide. Borrowers can also access an extended six-month grace period beyond the initial payment-free six months allowed after separating from school.
Extra Details
Loan terms: 5, 8, 10 and 15 years
Loan amounts available: $1,000 up to the total cost of attendance
Eligibility: Applicants must have a minimum credit score in the mid-600s.
Forbearance options: Up to 12 months of forbearance is available, in three- to six-month increments
Co-signer release policy: Available after 24 payments
*Borrowers with a co-signer who choose the shortest repayment term available and who make full monthly payments while in school qualify for the lowest rates.
N/A
7.49% to 12.99%
While Funding U’s rates are higher than other private lenders’, the company is unique in that it doesn’t make loans based on credit history and it doesn’t require student borrowers to use a co-signer. Borrowers qualify for a loan based on academic and work background, current courses, graduation prospects and likely future earnings.
Also, while Funding U’s loan limits are comparatively low, private loans should be used sparingly, so ideally borrowers won’t need them to finance larger gaps in funding.
Extra Details
Loan term: 10 years
Loan amounts available: $3,000 to $10,000 per year ($50,000 per student aggregate)
Eligibility: Students must meet GPA requirements and attend colleges that meet certain six-year graduation rate thresholds, depending on the student’s year in school. To qualify, first-year students must have a minimum high school GPA of 3.5, second-year students must have a minimum college GPA of 3.0, juniors must have a minimum GPA of 2.75 and seniors must have a minimum GPA of 2.5.
Note that only borrowers in these states can apply: Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia and Wisconsin.
Forbearance options: Up to 24 months of forbearance allowed in 90-day increments. Borrowers must pay $30 per month while in forbearance, which is less generous than payment-free forbearance that other lenders offer. But this policy helps borrowers avoid occurring large amounts of interest.
Co-signer release policy: No co-signer required
1.12% to 10.22%
3.49% to 11.59%
Discover charges no late fees on its private student loans, and it provides an interest rate discount if borrowers choose to pay the interest on the loan as it accrues while they’re in school. It also offers several unique deferment, forbearance and hardship payment options.
Co-signer release is not available, though, and there is only one loan term: 15 years. Know that you can prepay the loan without penalty, and if you have the means to do so, paying off a student loan in less than 15 years could save you a substantial amount in interest.
Extra Details
Loan term: 15 years
Loan amounts available: $1,000 up to total cost of attendance
Eligibility: Discover does not disclose its minimum credit score or income requirements, but in 2019 the company reported that 94% of all private loan borrowers had a FICO score of 660 or higher.
Forbearance options: Borrowers can take up to 12 months of forbearance, which is standard across the industry. But Discover also offers several additional hardship options, including a three-month suspension of payments for borrowers early in the repayment cycle and a six-month reduced payment option.
Co-signer release policy: None.
1.96% to 8.96%
(including 0.50% discount for automatic payments)
3.69% to 10.69%
(including 0.50% discount for automatic payments)
1.96% to 8.96%
(including 0.50% discount for automatic payments)
3.69% to 10.69%
(including 0.50% discount for automatic payments)
PNC Bank offers an extra-generous 0.50% interest rate discount for making automatic payments, and it provides a 12-month loan modification program for borrowers in financial distress (in addition to 12 months of forbearance). Loan modification lowers the interest rate and monthly payment charged.
It also offers co-signer release, though after an even longer period than Citizens Bank’s policy: 48 months.
Extra Details
Loan terms: 5, 10 and 15 years
Loan amounts available: Up to $50,000 per year ($225,000 aggregate, including federal student loans)
Eligibility: Does not disclose credit score or income requirements.
Forbearance options: Up to 12 months of forbearance available.
Co-signer release policy: Co-signers can be released from the loan after 48 payments.
1.03% to 10.41%
3.23% to 10.95%
Citizens Bank provides an additional 0.25% loyalty discount if a student loan borrower or their co-signer has an existing account with the bank. (Checking and savings accounts are only available in Connecticut, Delaware, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont.)
It also makes its loans available to international students. But co-signers must wait a longer period of time to be released from the loan than what many other lenders provide.
Extra Details
Loan terms: 5, 10 and 15 years
Loan amounts available: $1,000 up to $150,000 total over the course of your undergraduate education
Eligibility: Does not disclose credit score or income requirements.
Forbearance options: Up to 12 months of forbearance available.
Co-signer release policy: Co-signers can be released from the loan after 36 payments.
As you prepare to get a private student loan, don’t wait for your school to decide how much of a loan you can handle; do the due diligence yourself. Experts recommend borrowing no more than what you’ll most likely earn in your first year out of college. This can protect you from having unmanageable monthly payments after you leave school.
Some private student loan lenders don’t cap the amount of money you can borrow each year, but yours may. As you evaluate which loan suits you best, find out how the loan will be disbursed and what costs it will cover.
When picking a private student loan, look at the overall cost of the loan—including its interest rate and fees—and what help the lender offers if you have trouble affording your payments. Just one of the lenders on this list charges origination fees, and all except for one wait until at least 120 days of nonpayment before putting loans into default status.
When comparing rates, know the low end of the rate ranges will only be available to those with good or excellent credit scores. Also, all rates listed below include a standard 0.25% interest rate discount for using automatic payments.
We scored 12 lenders that make the most loans by volume across 15 data points in the categories of interest rates, fees, loan terms, hardship options, application process and eligibility. We chose the nine best to display based on those earning three stars or higher.
The following is the weighting assigned to each category:
Specific characteristics taken into consideration within each category included number of months of forbearance available, economic hardship repayment options available beyond traditional forbearance, perks like cash-back rewards upon graduation, discounts, time to default, disclosure of credit score and income requirements and other factors.
Lenders who offered interest rates below 10% scored the highest, as did those who offered more than the standard 12 months of forbearance, who made their loans available to non-U.S. citizens, who offered interest rate discounts beyond the standard 0.25% for automatic payments, who offered multiple loan terms maxing out at 15 years and who charged minimal fees.
In some cases, lenders were awarded partial points, and a maximum of 3% of the final score was left to editorial discretion based on the quality of consumer-friendly features offered.
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Private student loans usually offer variable and fixed interest rates that are based on the borrower’s creditworthiness. If you have good or excellent credit, then you’ll be eligible for a lower interest rate. But if you have poor or fair credit, prepare for an interest rate on the higher end of the range.
Variable rates rise and fall according to the index they follow. For example, the lender may use the prime rate as its benchmark.
Most traditional college students don’t have a long credit history, so they turn to another adult to co-sign their loan. A co-signer is an individual who is willing to use their good or excellent credit history to help someone get a loan that the student does not qualify for alone. If the borrower can’t make payments on the loan, the lender seeks payment from the co-signer. If the borrower defaults on the loan, it negatively affects the co-signer’s credit.
Some private loans offer to release the co-signer from the loan after the borrower makes a certain number of payments or meets other requirements. That can protect the co-signer from a credit hit as a result of the primary borrower’s payment history.
Federal student loans allow you to delay your loan payments while you are attending school. Some private student loans offer this, too, but interest still will accrue on these loans. (With federal student loans, interest does not accrue during deferment if you have subsidized federal direct loans, which are available to undergraduates with financial need.)
There are lenders that offer other types of deferment. For example, some allow you to delay your payments due to a financial hardship, like unemployment, or during military deployment.
Be mindful of the amount of interest you’ll owe and any fees the lender may charge for deferment. You’ll want to review your deferment options before choosing a loan.
Like deferment, forbearance lets you suspend payments for a certain period of time. Private lenders may use “forbearance” and “deferment” interchangeably. During forbearance on federal loans, interest continues to accrue, which differentiates it from deferment.
Regardless of whether the suspended payments are referred to as deferment or forbearance, on a private loan, the unpaid interest gets added to your principal, causing your monthly payments to increase once repayment begins again.
Editor’s note: Under the CARES Act, which was passed in response to the coronavirus (COVID-19) pandemic, federal student loan borrowers do not have to make payments for a period of six months, from March 13 through Jan. 31, 2021. Additionally, federal student loan interest rates are set at 0% during that time.
Just like you should read the fine print on a credit card, you should understand the fees you might incur on private student loans. Some lenders will add your fees to the loan principal. When you apply for a private student loan, seek out answers to the following questions:
Brianna McGurran is the Loans Analyst for Forbes Advisor. Most recently, she was a staff writer and spokesperson at NerdWallet, where she wrote "Ask Brianna," a financial advice column syndicated by the Associated Press. As spokesperson, she also contributed her expertise to outlets including The New York Times, ABC World News Tonight and the Today Show.