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Best Private Student Loans

While federal aid and scholarships play a vital role, private student loans have emerged as a valuable resource for bridging the financial gap. Here are the best private loans reviewed.

Written by
Grace Lemire
Last Update on Aug 15, 2023

As the cost of higher education continues to soar, many students find themselves in need of additional financial assistance to pursue their academic dreams.

To make things a little easier, we gone deep into the realm of private student loans and explored some of the leading providers in the market, highlighting their key features, interest rates, repayment options, to empower students and their families in making informed decisions about their educational financing.

Best Private Student Loans

LenderBest For…Fixed APRVariable APRMin. Credit Score
AscentBorrowers without a cosigner12.67% to 14.24%12.62% to 14.57%N/A
BrazosTexas residents2.77% to 6.96%5.02% to 9.45%680
College AvePart-time students4.44% to 15.32%4.99% to 15.32%Mid 600s
Custom ChoiceLow interest rates and borrower benefits3.65% to 12.47%5.97% to 14.45%Varies
DiscoverBorrowers with strong finances5.49% to 15.99%6.12% to 16.97%Varies
EarnestFlexible repayment options4.45% to 14.90%5.15% to 16.42%650
Funding UBorrowers with no credit history that need a small loan6.99% to 12.99%N/AN/A
MPOWERInternational and DACA students13.74% to 15.01%N/AN/A
Sallie MaePart-time and DACA students4.50% to 14.83%5.87% to 16.20%Mid 600s
SoFiMember benefits and flexible repayment4.49% to 13.80%5.16% to 13.07%Mid 600s
Best for Borrowers with no credit and no cosigner

Ascent

Auto Debit Discount
Up to 1%
Loan Amounts
$2,001 up to $200,000 total
Repayment Options
Deferred Repayment
Fixed APR
12.67% to 14.24%
Variable APR
12.62% to 14.57%
Minimum Credit Score
N/A
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Ascent’s non-cosigned, outcomes-based student loan uses information such as the borrower’s school, program, and GPA to determine their eligibility. While the interest rates are high, this loan option provides a solution for borrowers that may not qualify for credit-based options.

This makes it an ideal loan for borrowers with no credit and no cosigner, as well as DACA students.

Pros:

  • A solid credit history isn’t needed
  • Flexible repayment terms
  • No minimum income requirement
  • Up to 1% auto debit discount
  • 1% cash back graduation reward

Cons:

  • Much higher interest rates than some credit-based loan options
Additional Details

Ascent also offers two other loan options:

  • Cosigned, Credit-Based Loan: Best for borrowers with a cosigner
  • Non-Cosigned, Credit-Based Loan: Best for borrowers with a high credit score but no cosigner
  • Bootcamp Loan: Best for borrowers attending an online bootcamp program

 

Best for Texas residents

Brazos

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to 100% of school-certified expenses
Repayment Options
Deferred Repayment, Interest-Only Repayment, Immediate Repayment
Fixed APR
2.77% to 6.96%
Variable APR
5.02% to 9.45%
Minimum Credit Score
680
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Brazos is a non-profit lender providing student loans to Texas residents. While they’re only available to Texas residents, they offer highly competitive interest rates and flexible repayment options.

Pros:

  • Highly competitive interest rates
  • 0.25% auto debit discount
  • Flexible repayment options

Cons:

  • Only available to Texas residents
  • Must be enrolled at least half-time; not available to part-time students
Additional Details

Brazos’s interest rates are often lower than federal student loan interest rates. However, Brazos still recommends borrowing federal student loans first because of their protections and potential for forgiveness.

Best for Part-time students

College Ave

Auto Debit Discount
0.25%
Loan Amounts
Up to 100% of the school-certified cost of attendance
Repayment Options
Immediate Repayment, Interest-Only Repayment, Flat Repayment, Deferred Repayment
Fixed APR
4.44% to 15.32%
Variable APR
4.99% to 15.32%
Minimum Credit Score
Mid 600s
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College Ave is an online lender that offers undergraduate, graduate, and parent loans, plus student loan refinancing. Their loans come with competitive interest rates and flexible repayment options, but a strict cosigner release policy.

Pros:

  • Competitive interest rates
  • 0.25% auto debit discount
  • Flexible repayment options
  • Available to part-time students

Cons:

  • Not available to international students without a U.S. social security number
  • Half of the repayment term must be complete to release a cosigner
Additional Details

College Ave requires borrowers to have a minimum income of at least $35,000 per year to qualify. If you don’t meet that threshold, consider adding a cosigner to the loan.

Best for Low interest rates and borrower benefits

Custom Choice, Powered by Cognition

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to $99,999
Repayment Options
Immediate Repayment, Flat Repayment, Interest-Only Repayment, Deferred Repayment
Fixed APR
3.65% to 12.47%
Variable APR
5.97% to 14.45%
Minimum Credit Score
Varies
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The Custom Choice LoanⓇ powered by Cognition Financial offers competitive interest rates and flexible repayment terms of 7, 10, and 15 years. They stand out from competitors because of their 2% principal reduction upon graduation. For example, a $30,000 loan could have $600 removed from the principal balance with proof of graduation.

Pros:

  • Competitive interest rates
  • 0.25% auto debit discount
  • No fees
  • Principal reduction of 2% upon graduation

Cons:

  • Maximum borrowing limit is lower than some other lenders
Additional Details

Custom Choice is sponsoring a $1,500 scholarship every month until December 31, 2023, which provides an added benefit for borrowers.

Best for Borrowers with strong finances

Discover

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Repayment Options
Interest-Only, Fixed Repayment, Deferred Repayment
Fixed APR
5.49% to 15.99%
Variable APR
6.12% to 16.97%
Minimum Credit Score
Varies
Show More Details

Discover offers a straightforward student loan option with competitive interest rates and cash rewards for good grades. However, they only offer one repayment term, and they don’t offer an immediate repayment plan option.

Pros:

  • 0.25% auto debit discount
  • No fees
  • Rewards for good grades

Cons:

  • Only offers one repayment term of 15 years
  • No immediate repayment option
  • Hard credit check required to assess eligibility
Additional Details

Unfortunately, Discover doesn’t offer prequalification. This means that if you decide to apply, they’ll need to conduct a hard credit check, which will temporarily impact your score. It’s best to only apply if you are confident you meet or exceed the criteria to qualify.

Best for Flexible repayment options

Earnest

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to the school-certified cost of attendance
Repayment Options
Immediate Repayment, Interest-Only Repayment, Flat Repayment, Deferred Repayment
Fixed APR
4.45% to 14.90%
Variable APR
5.15% to 16.42%
Minimum Credit Score
650
Show More Details

Earnest offers a student loan with competitive interest rates, flexible repayment options,  and a 9-month grace period — which is longer than most competitors. They also offer the option to skip one payment every 12 months, although this should only be done if necessary.

If you qualify for a lower interest rate with a competitor, Earnest will match the rate and give you a $100 Amazon gift card once your rate match is complete.

Pros:

  • Competitive interest rates
  • 0.25% auto debit discount
  • 9-month grace period
  • Several repayment term options
  • Rate match guarantee

Cons:

  • Hard credit check required to assess eligibility
  • Loans are not available in Nevada
Additional Details

Earnest doesn’t offer prequalification, so you’ll need to submit a formal application to see if you qualify.

Best for Borrowers with no credit history that need a small loan

Funding U

Auto Debit Discount
0.25%
Loan Amounts
$3,001 to $20,000 per academic year (or $10,000 per semester)
Repayment Options
Flat Repayment, Interest-Only Repayment
Fixed APR
6.99% to 12.99%
Variable APR
N/A
Minimum Credit Score
N/A
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Funding U provides a viable solution for borrowers with no credit history that can’t qualify with other lenders. However, they only work with a select number of schools, offer just two repayment options, and have only one repayment term.

Pros:

  • No cosigner or credit history needed
  • No fees or penalties

Cons:

  • Interest rates are higher than some competitors
  • Loans aren’t available in 14 states
  • Smaller loan maximum than most competitors
  • No variable interest rate option
  • One loan term
  • Payment is required while in school and during the grace period
Additional Details

Funding U’s loan is ideal for borrowers without a cosigner, but it isn’t particularly impressive otherwise. Unless you can’t qualify with another lender, it might be best to look elsewhere.

Best for International and DACA students

MPOWER

Auto Debit Discount
0.25%
Loan Amounts
$2,001 up to $100,000 (or $25,000 per academic period)
Repayment Options
Interest-Only Repayment
Fixed APR
13.74% to 15.01%
Variable APR
N/A
Minimum Credit Score
N/A
Show More Details

MPOWER offers a non-cosigned, non-credit-based student loan that uses factors such as future income potential to assess the borrower’s eligibility. This loan is ideal for international and DACA student borrowers, however, it likely won’t be the best loan on the market for other students.

Pros:

  • Borrowers are assigned a dedicated student loan advisor
  • 0.25% auto debit discount
  • Available to international and DACA students
  • No cosigner or credit history required

Cons:

  • Interest rates are significantly higher than most competitors
  • Offers only one repayment term of 10 years
  • Payment is required while in school
Additional Details

MPOWER partners with Zolve to ensure all borrowers prequalify for a U.S. credit card and bank account. That way, payments made on an MPOWER student loan build credit history within the U.S.

Best for Part-time and DACA students

Sallie Mae

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Repayment Options
Interest-Only Repayment, Fixed Repayment, Deferred Repayment
Fixed APR
4.50% to 14.83%
Variable APR
5.87% to 16.20%
Minimum Credit Score
Mid 600s
Show More Details

Sallie Mae offers a simple, straightforward student loan option that’s available to full-time, part-time, and DACA students. They offer competitive interest rates, flexible repayment options, and the option for cosigner release.

Pros:

  • Competitive interest rates
  • 0.25% auto debit discount
  • Available for DACA students
  • Cosigner release after 12 months of on-time payments

Cons:

  • Hard credit check required to assess eligibility
Additional Details

To release a cosigner from a Sallie Mae loan, the primary borrower must demonstrate a sufficient credit history and the ability to assume full responsibility for the loan. So, even if you’ve met the minimum payment requirements, there will also be other requirements to meet.

Best for Member benefits and flexible repayment

SoFi

Auto Debit Discount
0.25%
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Repayment Options
Immediate Repayment, Interest-Only Repayment, Partial Repayment, Deferred Repayment
Fixed APR
4.49% to 13.80%
Variable APR
5.16% to 13.07%
Minimum Credit Score
Mid 600s
Show More Details

SoFi offers a student loan option with competitive interest rates, flexible repayment terms, and significant benefits and discounts. For example, SoFi members are eligible for an additional 0.125% discount for multiple loans — which is especially helpful for parents cosigning for more than one child.

Pros:

  • Competitive interest rates
  • 0.25% auto debit discount
  • No fees
  • Cosigner release after 12 consecutive, on-time payments
  • Additional discounts for SoFi members

Cons:

  • Doesn’t offer biweekly payments via autopay
Additional Details

SoFi offers borrowers additional perks like career coaching, financial planning, exclusive online experiences and events, and premium rates on travel.

How Do Student Loans Work?

Student loans provide financial assistance to students and their parents for covering various educational expenses.

What Can Student Loans Pay For?

Educational financing through student loans encompasses an extensive range of school-related costs. These cover:

  • Tuition: The primary cost of education.
  • Room and Board: Living accommodations and meals.
  • Books and School Supplies: Required reading materials and necessary tools.
  • Transportation Costs: Travel to and from school.
  • Technology Equipment: Such as computers or related software.
  • Day-to-Day Necessities: Food, utilities, and general living costs.

Repayment Terms

Repayment doesn’t usually start until after the student leaves school. Repayment terms range between five and 20 years, with longer terms often having higher interest rates.

Private vs. Federal Student Loans

Student loans can be broadly classified into two categories: federal and private. 

Federal Student Loans

Offered by the U.S. Department of Education, federal loans are often preferred due to:

  • Fixed Interest Rates: Independent of creditworthiness; all borrowers receive the same rates.
  • Flexible Repayment Plans: Options to base payments on income.
  • Deferment and Forbearance Options: More leniency in postponing payments.
  • Loan Forgiveness Programs: Several ways to qualify for debt cancellation.

Private Student Loans

Private student loans might be useful in some circumstances and offer:

  • Fixed or Variable Interest Rates: You can choose according to preference.
  • Simpler Application Process: Often less cumbersome than federal loans.
  • Low or No Origination Fees: Makes the initial process more affordable.
  • Co-Signer Option: If your credit is insufficient.

How To Get The Best Student Loan Rates In 2023

Federal loans offer standardized interest rates that don’t depend on creditworthiness. Here are the rates for the 2022-23 school year:

  • Undergrad Students: 4.99%
  • Graduate Students: 6.54%
  • Parents or Graduate Students (PLUS Loans): 7.54%

Private Student Loans

Private student loans are more volatile and depend on various factors. Here’s how you can qualify for the best rates:

  • Clean Up Your Credit: Higher credit scores often lead to lower interest rates.
  • Consider a Co-signer: If your credit isn’t strong enough.
  • Compare Lenders: Shopping around helps you find the best deal.
  • Choose Between Fixed and Variable Rates: Fixed rates remain constant, while variable rates can fluctuate.
  • Select the Right Repayment Terms: Shorter terms usually have lower interest rates, but higher monthly payments.

Making The Right Financial Decisions

Student loans, both private and federal, offer valuable resources for funding education. While federal loans often provide more attractive terms and protections, private loans can fill gaps in funding or offer better rates for those with excellent credit. Understanding the specific features and options, as well as comparing different lenders, can help students and their families make the best choice for their financial needs. Tools like student loan payment calculators can also aid in visualizing different scenarios and the total cost of the loan.

Frequently Asked Questions (FAQs)

Are Private Or Federal Student Loans Better?

Federal student loans offer stronger borrower protections and also have the potential to be forgiven. Private student loans tend to have higher interest rates and don’t come with any forgiveness options.

Borrowers should exhaust all federal student loan options before pursuing private student loans.

What Is A Good Interest Rate?

The best interest rate is the lowest one you’re able to find. The average is between 4% and 15%, but it’s best to aim for around 6% or lower.

Grace Lemire is a full-time content writer and part-time social media creator with a passion for helping people navigate life's toughest financial decisions – from moving out of your parents' house to buying a home.