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What are Private Student Loans? 

If the cost of attending college is stretching your wallet - and if it isn’t, please tell us your secret - then you may have considered taking out a private student loans. What exactly is a private student loan?

Unlike federal student loans, which are funded and insured by the federal government - private student loans are financed by banks and private lenders. Federal loans tend to have better conditions than private loans, as well as lower credit requirements. In addition, the repayment terms have a tendency to be less forgiving with private loans and you may need a cosigner. In a sense, private student loans more closely resemble personal loans than federal student loans and are often there to fill in the gap for school costs that are not eligible for federal loans. 

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, here are a few to look at: 

The Top Student Loan Providers 

1. Credible

  • Loan amount: $1,000 to full cost of tuition

  • APR: 3.26%

  • Loan term: 5-20 years

  • Minimum credit score: None; cosigners are accepted 

Credible is an online marketplace that lets you compare pre-qualified offers from a network of vetted lenders with strong reputations. Getting an offer shouldn’t take you more than a couple minutes on the user-friendly website. 

The site is best for people with good credit, but even if your financial history is a bit spottier, you can get a cosigned loan through Credible. The site states that you’ll need to have a credit score of over 660 to get a loan with good rates without a cosigner. 

Regardless of whether you get a loan on your own or through a cosigner with good credit, you won’t be charged any origination or service fees by credible, which will also allow you to pay off your loan ahead of time without any prepayment penalties. 

See the full Credible Review

2. College Ave

  • Loan amount: $1,000 up to full cost of degree

  • APR: 2.84%

  • Loan term: 10-15 years

  • Minimum credit score: 640 

College Ave is an excellent choice for anyone who has a solid credit score or a reliable cosigner. They offer loans and refinancing to both undergraduate and grad-school students, as well as parent loans for those looking to help their kids get through college. 

College Ave offers a range of flexible lending and repayment options, allowing customers to choose the plan best suited for their path. It takes just 3 minutes to apply, and they also offer a stack of free tools and resources to help calculate the cost of your loan.

See the full College Ave Review

3. Ascent 

  • Loan amount: $2,000-$200,000 or total attendance costs for 1 year

  • APR: 4.19%

  • Loan term: 5-15 years

  • Minimum credit score: 600 with cosigner; 680 alone with 2+ years of credit history; none if applying alone without 2 years of credit history   

Ascent’s flexible terms make it an ideal choice for students who wish to extend their schooling, pursue an internship, or consider their options before joining the workforce. Various deferment and forbearance options make it an attractive choice, allowing students room to breathe while they chart out their education or career paths. 

Ascent accepts applications with and without cosigners, and rewards those who make full consecutive payments with the option to release their cosigners. It also offers flexible payments with a grace period of up to 60 months for those joining the military or going into medical residency. 

See the full Ascent Review

Closing 

If you’re struggling to pay for college you are by no means alone. While federal student loans are the most popular option for those looking to fund higher education, private student loans offer a number of options that can fund your education if you’ve already maxed out your federal loan limits or are applying to a school that doesn’t qualify for federal loans. Take a look at what you need and what your options are, and make the decision that’s best for your future. 

* College Qve Student Loans Disclaimer:

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.College Ave Refi Education loans are not currently available to residents of Maine.The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 8/1/2019. Variable interest rates may increase after consummation.

** SoFi Disclaimer:

  • Interest Rates: Eligibility and Important Details

APR Rates shown are effective as of 10/2/2019 and include the 0.25% autopay discount and assume a single disbursement. If approved for a loan, the rates and terms offered will depend on things like creditworthiness, the length of the loan, and other factors, and will fall within the range of rates available by applicable loan term—check out our APR examples and terms. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Want to learn more? Check out our eligibility criteria. SoFi reserves the right to change interest rates at any time without notice, changes would only apply to applications begun after the effective date of the change.

  • Undergraduate Student Loans

Fixed Rates: Fixed rates range from 5.05% APR to 11.71% APR (with autopay).

Variable Rates: Starting variable rates range from 3.43% – 11.03% APR (with autopay), and will never exceed 13.95% (sometimes lower in certain states as required by law). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin of between 1.38% – 9.98%. The current one-month LIBOR rate is 2.05%. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law.

  • Graduate Student Loans

Fixed Rates: Fixed rates range from 4.73% APR to 11.99% APR (with autopay).

Variable Rates: Starting variable rates range from 3.11% – 11.37% APY (with autopay), and will never exceed 13.95% (sometimes lower in certain states as required by law). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin of between 1.06% and 9.76%. The current one-month LIBOR rate is 2.05%. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law.

  • Parent Student Loans

Fixed Rates: Fixed rates range from 5.05% APR to 11.71% APR (with autopay).

Variable Rates: Starting variable rates range from 3.43% – 11.03% APR (with autopay), and will never exceed 13.95% (sometimes lower in certain states as required by law). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin of between 1.38% and 8.98%. The current one-month LIBOR rate is 2.05%. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law.

  • Autopay Discount.

The SoFi 0.25% autopay interest rate reduction requires you to agree to make your scheduled monthly payments by an automatic monthly deduction (ACH) from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi.

  • Credit Pulls.

To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms you are pre-qualified for, subject to the verification of the information you have submitted as part of your application. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan and may impact your credit score.

  • Unemployment Protection.

If you lose your job through no fault of your own, you may apply for Unemployment Protection. If you qualify, SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in up to three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance, you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with SoFi Career Services to look for new employment. If the loan is cosigned, the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions. Learn more about SoFi’s Unemployment Protection here #what is sofis unemployment protection program.

  • Negative Amortization.

Interest begins accruing on the first disbursement date, but some repayment options do not require full principal or interest payments until the end of the deferment period. Any unpaid interest that has accrued and remains unpaid at the end of the deferment period will be added to the principal balance at the end of the deferment period. Thereafter, interest will accrue on this new principal balance. This is known as negative amortization. You can help avoid negative amortization by making extra payments on your loan during the deferment period. Check out our APR examples and terms. Still have questions? Our FAQs have answers.

  • Important Information About Federal Repayment Options.

SoFi Private Student Loans do not have the same repayment options that federal loan programs offer, such as Income-Based Repayment or Income-Contingent Repayment, or PAYE or REPAYE. In addition, federal student loans offer deferment and forbearance options that are not available for SoFi Lending Corp. Private Student Loan borrowers. Find out more about federal repayment options here.

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