Best Private Student Loan Options

Nadav Shemer

They say where you study will be one of the biggest decisions of your life, but this only partially tells the story. The other big decision most people have to make before going to school—and one that shouldn’t be taken lightly—is how to fund those studies. Tuition fees are expensive, but they can become less burdensome by simply picking the best lender.

On this page, we present our list of the top 10 private student lenders for 2020. Together they offer the best private student loan interest rates on the market, but that’s not the only reason we selected them. We selected these 10 lenders for reasons like expertise in handling student borrowers, flexible repayment options, and added-value features like free mentoring and scholarship opportunities.

One thing you may notice in this guide is that we don’t talk much about cosigner options. That’s because all 10 lenders on this list already offer a cosigner option by default. Furthermore, all except one of these lenders offers a choice between fixed and variable rates. As a general rule, the best rates go to borrowers with excellent credit (or who bring a cosigner with excellent credit) who choose a variable rate and agree to use autopay to make monthly payments.

Undergrad, Graduate, Parent, Career
Undergrad, Graduate, Parent, Career, K-12
Undergrad, Graduate
Undergrad, Graduate, Parent
Undergrad, Graduate
Undergrad, Graduate
Undergrad, Graduate
Undergrad, Graduate
Undergrad, Graduate, Parent
Undergrad, Graduate
$1,000 up to full cost of attendance
$1,000 up to full cost of attendance
$1,000 up to full cost of attendance
$1,000 up to full cost of attendance
$1,000 up to full cost of attendance
$1,000 - $200,000 (aggregate)
$1,500 up to full cost of attendance
$2,000 - $500,000 (aggregate)
$5,000 up to full cost of attendance
$1,000 up to full cost of attendance
5-15 years
5-20 years
5-20 years
15-20 years
5-20 years
5-20 years
10-15 years
10-20 years
5-15 years
5-20 years
1.24%
1.25%
1.24%
1.24%
1.24% (with autopay)
2.72%
3.75%
5.76%
1.90%
2.99%
640
Not disclosed
650
660
Varies
600
670
670
Not disclosed
Varies
None
None
None
None
Varies
None
None
None
None
Varies
Direct
Direct
Direct
Direct
Marketplace
Direct
Direct
Direct
Direct
Marketplace

The Best Private Student Loans - An In-Depth Look

  • 1

    College Ave

    Apply and get a decision within 3 minutes
    College Ave
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:1.24%
    • Minimum credit score:640

    There are several reasons College Ave is number one among private student loan lenders. Firstly, it is dedicated solely to student loans (as its name implies). Secondly, its powerful Fintech platform returns a verdict within minutes. And thirdly, it offers maximum flexibility, including loan types rarely seen elsewhere (e.g. parent, career training) and 4 repayment terms (5, 8, 10, or 15 years).

    The first thing you’ll notice when you land on the College Ave website is how transparent it is. Rates and other information are clearly displayed on the home page (and why not, seeing as how they are so competitive?). There are a range of other incentives here too, including scholarship opportunities and guaranteed $150 cashback upon completion of your degree.

    Pros
    • Competitive, transparent rates
    • Parent loan options
    • Cashback when you complete your degree
    Cons
    • Repayment terms limited to 15 years or less
    • Lack of a proper forbearance policy
    Read College Ave Review
  • 2

    Sallie Mae

    Largest range of loan options
    Sallie Mae
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:1.25%
    • Minimum credit score:Not disclosed

    Founded in 1972, Sallie Mae is one of the best-known and oldest private student lenders. It also happens to serve a larger number of borrowers than any other student lender. It offers more loan types (undergrad, graduate, parent, career training, and even K-12) than anyone else. And it lends a helping hand to borrowers that most lenders ignore, such as non-Americans and part-time students.

    Sallie Mae is nothing if not flexible. On its website you’ll find plenty of information about the different repayment options, such as deferment and grace periods—and what it all means for your principal and interest. Cosigners are encouraged, and you can release your cosigner as early as 12 months into your loan.

    Pros
    • Provides loans to part-time students
    • Non-US students can apply with American co-signer
    • Free Chegg study help (value $100)
    Cons
    • Minimum credit score not disclosed
    • Lack of information about income requirements
    Read Sallie Mae Review
  • 3

    Earnest

    Great rates—if you/cosigner have great credit
    Earnest
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:1.24%
    • Minimum credit score:650

    Earnest is a Fintech lender offering private student loans as well as student loan refinancing and personal loans. Its platform is very easy to use, and it shouldn’t take you more than 2-3 minutes to fill out an application. Its proprietary algorithm works super-fast—returning a decision to you within seconds of hitting ‘submit’.

    The eligibility requirements are relatively strict, but the conditions are great for whoever does end up qualifying. Earnest offers close to the lowest rates on the market for borrowers/cosigners with excellent credit. And once you’re in, it offers a great deal of flexibility, including a longer grace period than virtually all competitors and the option of skipping 1 payment every year.

    Pros
    • 9-month grace period
    • Lets you skip 1 payment every year
    • Zero fees
    Cons
    • Only serves degrees at Title IV-qualified schools
    • Tough qualifying requirements
    Read Earnest Review
  • 4

    Discover

    Student loans from a trusted name in finance
    Discover
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:1.24%
    • Minimum credit score:660

    If the name ‘Discover’ sounds familiar, that’s because its credit cards are used by 50 million Americans. Discover Financial branched out into student loans when it acquired the Student Loan Corporation from Citigroup in 2010. Today it is one of the biggest student loan lenders in the country, offering undergraduate loans and a host of graduate loans (MBA, law, bar exam, medical residency, and health professions).

    Despite the inflexible payment options (15 years only), don’t rule out Discover. This lender offers a range of incentives you won’t necessarily find everywhere else. For example, when you qualify for a loan, you automatically pre-qualify for all the remaining years in your degree. Also, Discover promises 1% cashback on your loan amount when you earn at least a 3.0 GPA or equivalent.

    Pros
    • International students accepted (with American cosigner)
    • Automatic pre-qualification for future years
    • Cash rewards for good grades
    Cons
    • Limited repayment options
    • High credit score threshold
    Read Discover Review
  • 5

    Credible

    Compares all the top lenders in one go
    Credible
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:1.24% (with autopay)
    • Minimum credit score:Varies

    Credible is an online loans marketplace that helps borrowers get private loans for college from a network of vetted lenders. Its network includes some of the lenders that appear on this page, such as College Ave and Sallie Mae. The benefit to applying through Credible is that it saves you the trouble of applying to multiple direct lenders separately.

     Unlike other comparison sites, Credible actually works with its customers through the whole process. Representatives from its San Francisco-based customer support team are available 7 days a week. If you wish, they can provide 3-way phone support connecting you and top lenders—with your Credible support agent on the line to make sure everything runs smoothly.

    Pros
    • Saves you from filing multiple applications
    • Customer support 7 days a week
    • Financing for almost any degree
    Cons
    • Not a direct lender
    • Limited to undergrad and graduate degrees
    Read Credible Review
  • 6

    Ascent

    Best option for poor credit
    Ascent
    • Loan amount:$1,000 - $200,000 (aggregate)
    • APR from:2.72%
    • Minimum credit score:600

    Ascent has one of the best private student loans for bad credit, with a minimum credit score that’s 40 points lower than any other lender on this list. What it gives in flexibility it takes back in rates. Its lowest APR is significantly higher than the other lenders on this list, although this makes sense when you consider that it’s not targeting high-credit borrowers.

    It’s safe to say Ascent runs more promotions than your average student lender. It guarantees 1% cashback upon successful graduation. It offers refer-a-friend cashback worth up to $525 per referral. And it has regular scholarship giveaways (including a $1,000 scholarship every weekday through summer when we last checked in).

    Pros
    • 1% cashback upon graduation
    • Regular scholarship giveaways
    • Refer-a-friend promotions
    Cons
    • Doesn’t have the best APRs
    • Loan amounts are limited
    Read Ascent Review
  • 7

    MEFA

    Non-profit with competitive rates
    MEFA
    • Loan amount:$1,500 up to full cost of attendance
    • APR from:3.75%
    • Minimum credit score:670

    MEFA stands for Massachusetts Educational Financing Authority, a non-profit organization that offers competitive rates to students registered at qualifying Massachusetts institutions. Although MEFA only serves the state of Massachusetts, we included it on this list because it’s an example of a non-profit lender that goes the extra mile.

    As a non-profit, MEFA goes above and beyond most student lenders. Despite the high minimum credit requirements, its rates are very competitive overall. It offers very flexible repayment options, including deferred payments and a generous interest-only grace period. It also offers a ton of educational resources, just to make sure you make informed decisions.

    Pros
    • Very competitive fixed rates
    • Lots of educational resources
    • Maximum flexibility for existing borrowers
    Cons
    • Only for Massachusetts students
    • No variable rate option
    Read MEFA Review
  • 8

    CommonBond

    Mentor, not just a lender
    CommonBond
    • Loan amount:$2,000 - $500,000 (aggregate)
    • APR from:5.76%
    • Minimum credit score:670

    Founded in 2012, CommonBond is a lender with a difference. While most lenders treat their customers as mere borrowers, CommonBond aims to build a relationship. This is most evident in its free ‘Money Mentor’ program, which assigns you an advisor who helps you manage your budget and find internship opportunities.

    If you like the idea of a loan with a side of social responsibility, then CommonBond is for you. Through its partnership with Pencils of Promise, CommonBond has provided schools, teachers, and educational technology to thousands of students in Ghana. In fact, whenever a new borrower takes out a loan (or refinances a loan), CommonBond covers the cost of one child’s education in Ghana.

    Pros
    • 12-month forbearance period
    • 6-month grace period
    • Donates to children’s education in developing world
    Cons
    • High fixed interest rates
    • Not available in Nevada or Mississippi
    Read CommonBond Review
  • 9

    SoFi

    Streamlined online application
    SoFi
    • Loan amount:$5,000 up to full cost of attendance
    • APR from:1.90%
    • Minimum credit score:Not disclosed

    SoFi is one of the biggest names in Fintech, with streamlined lending for student loans, mortgages, personal loans and more. As with all SoFi products, its loans come with transparent terms and repayment options, not to mention a range of free tools and resources to help you get the most out of your college experience.

    All SoFi borrowers automatically get free access to Edmit Plus, a tool that helps you estimate financial aid, compare cost of attendance, or learn about scholarships and merit aid. Edmit Plus even gives you personalized salary estimates based on your profile and major, just to make sure you make the most informed decision possible.

    Pros
    • Network events and work opportunities
    • Discounts on college entrance test prep
    • Free financial planning tool
    Cons
    • High minimum borrowing amount
    • Community colleges generally not eligible
    Read SoFi Review
  • 10

    Lendkey

    Best loans from 300+ credit unions & communit...
    Lendkey
    • Loan amount:$1,000 up to full cost of attendance
    • APR from:2.99%
    • Minimum credit score:Varies

    LendKey is an online marketplace for private student loans from credit unions and community banks. The platform works much like any other marketplace, pre-qualifying you for multiple lenders and helping you compare your options. The main difference between LendKey and the other marketplace in this guide (Credible), is that LendKey doesn’t work with private lenders.

    The LendKey application process is as quick and easy as you could hope for. It only takes a few minutes to fill out an application and see your personalized results. LendKey’s algorithm pays close attention to your profile. For example, if you served in the military, LendKey will direct you to a military-related credit union, or if you have worked in teaching it will refer you to a teacher-related credit union.

    Pros
    • Pre-qualification for multiple lenders with 1 application
    • Lenders compete for your attention by cutting rates
    • Very quick application process
    Cons
    • All loans require credit union membership
    • Contact details required to see rates
    Read Lendkey Review

What Are Private Student Loans?


Private loans are similar to federal loans in the fact that they can be used to pay for school expenses. Taking out a student loan means that you will be responsible for paying back the amount of money borrowed after your grace period—typically 6 months after graduation or dropping out of school. 

Unlike a federal loan, a private student loan is not backed by the government. Instead, this type of college loan is backed by a bank, credit union, or online lender. Federal loans generally have better terms, repayment plans, and do not require a credit check, but there is a limit to how much money you can borrow toward your degree. 

Private student loans help fill in the gap so that you aren’t stuck to foot the bill if your federal-issued financial package isn’t enough. Many students are able to secure financial aid and federal loans during their undergrad degree, but financing becomes harder to receive for advanced degrees. This is where private student loans really shine. They are the additional financing option available so you can finish your degree and advance your career. 

What to Consider When Looking for a Private Student Loan

When considering a private student loan you’ll want to look at a lot of the same parameters that you would when searching for a personal loan. 

Check if the loan includes a fixed or variable interest rate, and if it makes more sense to you financially to take out a longer loan term with higher interest rates, or a shorter term with lower interest but higher monthly payments. 

Private student loans can be less forgiving than federal loans, They may not allow you to postpone repayment until after you graduate or allow you to halt your repayment schedule if you become unemployed. 

Look at your monthly budget and determine how much you write off each month towards paying off the loan, and if you run the risk of defaulting. Determine for yourself if it makes more sense to take out a loan that requires only interest-only payments while you’re in school, if you’d rather make full monthly payments right away, or if you’d rather be able to defer your payments until after graduation

Also make sure to check what type of fees the company charges for the loan, and what type of customer service options are available. 

How to Apply for a Private Student Loan

One of your first steps when applying for any loan should be to take a look at your credit score to see what type of shape it is in. Private student loans typically require a higher credit score, so if yours is fairly low or you don’t have much credit history, then you may need to find a cosigner for your loan. Look for someone in your family who has a good credit history, which should help you when applying for the loan. 

You’ll also need to get a good amount of paperwork together for the application, including identification like:

Your Social Security number

  • Your date of birth, address and identifying details
  • Pay stubs
  • Proof of assets
  • Monthly rent or mortgage receipts
  • Any other information that lays out your financial status

You will also need to fill out the Private Education Loan Applicant Self-Certification form, which is provided by your school and will show the lender exactly what costs you face for your education. 

Try to get an idea of how much money you want to borrow as well. Do you want just enough to pay for tuition or would you also like some funding to pay for housing and other essentials? This will make a big difference in the size of the loan. 

Finally, you will need to fill out a formal application for your private student loan with the lender of your choice.

Conclusion

For most people, going into debt is an unavoidable part of going to college or grad school. You may not be able to avoid borrowing funds, but you can certainly avoid making a bad decision. Before you apply for private student loans, always do a comparison shop and apply to the lenders that best meet your needs and preferences.

Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He enjoys writing about the latest innovations in financial services and products.