The 16 Best Private Student Loans of January 2021

Private student loans don’t offer all of the same benefits that federal student loans do, but they’re sometimes necessary, especially for those pursuing post-secondary schooling. If you do find that you can’t cover all of your education expenses with governmental funding, make sure you take the time to find the best private student loans for you.

Due to the multiplicity of lenders, there’s a lot more diversity between different private student loans. The unique combinations of interest rates, repayment terms, and loan perks mean that what’s right for one borrower might not work for another. You’ll need to review all of your options carefully before making a decision. Fortunately, to make your search easier, we’ve done the research and analysis for you.

1. A.M. Money

Terms:

  • Variable Rates: N/A
  • Fixed Rates: 7.08% – 8.85% APR
  • Fees: Origination fee of 4.5% but no prepayment or late fees.
  • Loan Amounts: $2,000 to $50,000 per year
  • Repayment Terms: 10-year repayment term. No payments until six months after graduation. Income-based options.

Application and Qualification: A.M. Money has a unique style of risk assessment that’s specially made for student borrowers. They recognize that students often have no control over their credit or even access to a cosigner, so they use GPA and academic achievements to judge creditworthiness. You don’t even need a cosigner to qualify.

Drawbacks: Unfortunately, A.M. Money isn’t the cheapest option. Their APR is fixed at Federal Plus loan rates, and they charge a significant origination fee. At their maximum balance of $50,000 (which is also a bit low), that origination fee alone would be over $2,000. They also only work with a limited number of schools, so it’s not accessible to everyone, even if you’d be otherwise accepted.

Best For: Despite the drawbacks mentioned above, A.M. Money is a wonderful solution for students who would otherwise not have access to funding because they have no credit or cosigner. If you’re struggling to get a loan but have a strong academic track record, A.M. Money’s student loans could be right for you.

2. Ascent

Terms (Undergraduate):

  • Variable Rates: 2.46% to 12.98% APR
  • Fixed Rates: 3.39% to 14.50% APR
  • Fees: No application, origination, or prepayment fees
  • Loan Amounts: $1,000 to $200,000
  • Repayment Terms: 5, 7, 10, 12, or 15-year repayment terms. No payments until up to 9 months after graduation.

Application and Qualification: Ascent’s loans are available to both undergraduate and graduate students that are enrolled at least half-time. They also allow certain non-citizen students to apply as long as they have an American cosigner. They encourage applying with a cosigner to help your odds of qualifying, though they also offer a future income-based option.

Drawbacks: Unfortunately, not all schools are eligible for Ascent loans. Make sure yours qualifies before you apply. Additionally, it’s not the best deal for cosigners. They have to take a financial wellness course as part of the application and will have to wait at least two years before you can release them.

Best For: The most intriguing option Ascent offers is their non-cosigned future income-based loan. If you don’t have a cosigner or a credit history, getting private lending is going to be tough in most places, but you can still qualify with Ascent based on your school’s statistics and your academic performance.

3. Advantage Education Loan

Terms (Undergraduate): 

  • Variable Rates: N/A
  • Fixed Rates: As low as 3.50% APR
  • Fees: No application, origination, default, late, or prepayment fees.
  • Loan Amounts: $1,000 up to 100% of education costs (as certified by your school).
  • Repayment Terms: 10-year repayment term. Payments start up to six months after graduation.

Application and Qualification: Advantage’s application is pretty standard. You’ll need to be enrolled at an eligible school, be a citizen (or have a proof of residency card), and have an “acceptable income and credit history or an approved cosigner” to qualify. Although unfortunately, they don’t disclose much about what that last part means to them.

Drawbacks: Advantage’s loans are only available in select states, so they might not be accessible to you if you live or attend school outside of their territory. Additionally, their repayment terms are less flexible than other lenders, with the 10-year plan being their only offer. Cosigner release is also slower than others and isn’t available until after 36 months of on-time payments.

Best For: Advantage has a few noticeable perks, most notably their forbearance allowance of 24 months, which is far above the industry average. They also have low fees, allow you to pre-qualify without a hard inquiry on your credit, and offer loans to students who are enrolled less than half-time.

4. Citizens One

Terms (Undergraduate):

  • Variable Rates: 1.21 – 10.54% APR
  • Fixed Rates: 4.25 – 11.04% APR
  • Fees: No application, origination, or prepayment fees.
  • Loan Amounts: $1,000 to $150,000
  • Repayment Terms: 5, 10, or 15-year repayment terms. Payments start up to 6 months after graduation.

Application and Qualification: Citizens One allows you to apply just once and qualify for funding for your entire education instead of having to come back for another round every year. However, they don’t disclose minimum credit score or income requirements for borrowers or the cosigners that they suggest using.

Drawbacks: Citizens One isn’t super transparent about their qualification requirements and they don’t provide any form of soft-check assessment tool. That means that if you do choose to apply, your credit score could take a hit and you might end up with nothing to show for it.

Best For: Citizens One is best for existing Citizens Bank customers. You’ll already have a relationship with them, which means that you’ll have a better understanding of their minimum approval requirements and be more likely to get approved. They also offer a loyalty discount, which is always a nice incentive.

5. College Ave

Terms (Undergraduate):

  • Variable Rates: 1.09% – 11.98% APR
  • Fixed Rates: 3.49% – 12.99% APR
  • Fees: No application, origination, or prepayment fees.
  • Loan Amounts: From $1,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5, 8, 10, or 15 years, with extra flexibility on the timing of your principal and interest relative to graduation.

Application and Qualification: College Ave boasts an extremely quick turnaround time on their applications. It’s free, and you can get an answer back regarding qualification within just a few minutes. In general, you (or your cosigner) will need a credit score in at least the mid 600s to get approved.

Drawbacks: As is the case with many private student loans, if you’re an undergraduate student with a low or no credit score, then you’ll need a cosigner to qualify. And unfortunately, College Ave doesn’t let those cosigners off the hook easily. You won’t be able to apply to release them from until half the loan term has elapsed.

Best For: College Ave’s lack of fees and low-interest rates make it a great option for a wide range of borrowers. Their flexibility all but ensures that they’ll be able to accommodate your needs, so if you want to design a very specific borrowing plan, College Ave might be the best fit for you.

6. CommonBond

Terms (Undergraduate): 

  • Variable Rates: 6.59% – 9.39% APR
  • Fixed Rates: 6.98% – 10.74% APR
  • Fees: No application, origination (for undergraduate students), or prepayment fees.
  • Loan Amounts: $2,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5, 10, 15, and 20-year repayment plans. Payments start up to 6 months after graduation.

Application and Qualification: CommonBond requires all undergraduate students to apply with a creditworthy cosigner, which is usually only a suggestion at most other lenders. They also require you to reapply every year, which can be tiresome and possibly damaging to your credit score.

Drawbacks: The cosigner requirement can be an issue for some undergraduate borrowers who don’t have access to one. They don’t offer a soft-credit check option, so you’ll have to take a hard inquiry to apply. Additionally, they’re a bit more expensive than average, with a 2% origination fee for graduate loans and a higher floor on their variable rates.

Best For: CommonBond caters well to the socially conscious, as they’ve partnered with  Pencils of Promise to provide scholarships to children in Ghana whenever you take out a loan or refinance with them. They also provide a personal finance expert to support you, which might entice borrowers who struggle with money.

7. Custom Choice

Terms (Undergraduate):

  • Variable Rates: 1.22 – 9.70%
  • Fixed Rates: 4.26 – 10.74%
  • Fees: No application, origination, late, or prepayment fees.
  • Loan Amounts: $1,000 – $99,999 annually.
  • Repayment Terms: 7, 10, or 15-year repayment term.  Payments start up to 6 months after graduation.

Application and Qualification: Custom Choice offers a quick and easy pre-qualification tool that will help you get an estimate of your rate without impacting your credit. They suggest a cosigner since it may lower your rates and increase your chances of approval, but it’s not a requirement. 

Drawbacks: Custom Choice isn’t available in Arizona, Iowa, or Wisconsin which might impact your ability to take out a loan from them. Additionally, they have a longer than average cosigner release period at 36 months of on-time payments.

Best For: Custom Choice is a great option for the budget-conscious due to their complete lack of fees, even for late payment. They also offer competitive rates, with discounts available for automated payments plus additional seasonal discounts. To top it off, at graduation they’ll grant you a 2% principal reduction.

8. Discover Private Student Loans

Terms (Undergraduate):

  • Variable Rates: 1.24% to 11.99%
  • Fixed Rates: 4.24% to 12.99%
  • Fees: No application, origination, late, or prepayment fees.
  • Loan Amounts: $1,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 15-year repayment plan.  Payments start up to 6 months after graduation.

Application and Qualification: Discover offers multi-year application options, so you might not have to reapply every year you’re in school. They require that you be making satisfactory academic progress as defined by your school to apply and actually reward you with cash for a 3.0 GPA or higher. They suggest a cosigner, but it’s not required if you have good credit.

Drawbacks: Discover doesn’t have a public cosigner release policy, which might make it difficult to find someone willing to cosign for you. They also only offer one repayment term of 15 years, which might be longer than some would prefer.

Best For: Discover is another good option for those looking to save, especially if you’re a good student. There are no fees of any kind, and they have rewards in place for getting a 3.0 GPA as well as a 2.0% rebate on your loan amount when you graduate.

9. Earnest

Terms (Undergraduate):

  • Variable Rates: 1.05% – 11.44% APR
  • Fixed Rates: 3.49% – 12.78% APR
  • Fees: No origination, disbursement, prepayment, or late fees.
  • Loan Amounts: $1,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5, 7, 10, 12, and 15-year repayment terms. Payments start up to 9 months after graduation.

Application and Qualification: Earnest is refreshingly upfront about their application and qualification requirements, which are listed out below. You and/or your cosigner must:

  • Be a U.S. Citizen or Permanent Resident
  • Have 3+ years of good credit history, a minimum credit score of 650, and no history of bankruptcy
  • Have a minimum yearly income of $35,000 (in USD)
  • Live in the District of Columbia or a state that Earnest lends in (all but NV)

They also offer a pre-qualification option which will tell you if you qualify within just a couple of minutes without hurting your credit score.

Drawbacks: Earnest only loans to full-time students, so this isn’t the option for you if you’re currently (or planning to be) attending part or half-time. They also don’t offer any cosigner release, though they will allow you to refinance out of your loan without a cosigner if you qualify.

Best For: Earnest offers much more flexible repayment options than most lenders, which makes it a great choice for those who are worried about being able to pay back their loans effectively. They have a wide range of repayment terms, a longer than average grace period before payments start, and the option to skip one payment a year without penalty.

10. Funding U

Terms (Undergraduate):

  • Variable Rates: N/A
  • Fixed Rates: 7.99% – 14.99% APR
  • Fees: No application, origination, prepayment, or late fees.
  • Loan Amounts: $3,000 to $10,000
  • Repayment Terms: 10-year repayment term. Payments are required while in school.

Application and Qualification: Funding U doesn’t require students to have a cosigner or credit score to qualify. Instead, they use “historical data” to identify the trends of successful students and compare your track record to those students.

Drawbacks: The biggest downside to borrowing from Funding U is the requirement for in-school payments and subsequent lack of a grace period. You’ll have to be able to afford at least some form of monthly payment while in school to take out a loan from this lender. Also, their maximum loan amounts are considerably lower than average.

Best For: Funding U is best for strong students who already have federal loans and scholarships to pay for most of their education costs, especially when combined with the lack of a cosigner or credit score.

11. LendKey

Terms (Undergraduate):

  • Variable Rates: As low as 1.49% APR
  • Fixed Rates: As low as 3.99% APR
  • Fees: No application, origination, or prepayment fees.
  • Loan Amounts: $1,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5, 10, or 15-year repayment terms. Principle payments start up to 6 months after graduation.

Application and Qualification: LendKey’s application process is par for the course in the industry. They base their lending decisions on your credit score and credit history, and you’ll need to undergo a hard credit inquiry to see if you qualify. If you don’t have much of a credit score, you’ll need a cosigner to help you out.

Drawbacks: Most private lenders allow you to defer both your principal and interest payments until after you graduate, plus a short grace period. LendKey believes that it’s best to make students pay interest while in school to teach them good financial habits, which might turn some borrowers off.

Best For: LendKey offers a longer period of forbearance than most of their peers. They allow you 18 months, while 12 months is fairly standard. If you like the added comfort that extra wiggle room brings, LendKey could be a good fit for you.

12. MPower Financing

Terms:

  • Variable Rates: N/A
  • Fixed Rates: 7.53% – 14.97% APR
  • Fees: 5% Origination Fee
  • Loan Amounts: $2,001 to $25,000 annually. $50,000 lifetime limit. 
  • Repayment Terms: 10-year repayment term. Principal payments begin up to 6 months after graduation.

Application and Qualification: MPower doesn’t require a credit score, credit history, or cosigner to apply. In fact, they’re among the most flexible when it comes to application and qualification requirements and lend liberally to over 190 different nationalities of international students. You don’t need to be a citizen, just attend one of their 350 approved schools in the US or Canada.

Drawbacks: One significant downside to borrowing from MPower is their 5% origination fee, which can’t be overlooked. Additionally, you’ll need to make interest payments while you’re in school and during your grace period, and their lifetime limit of $50,000 might be an issue for many.

Best For: Those limitations aside, MPower is one of the best options in the industry for international students. They require no cosigner, collateral, or American credit history, and you can repay your loan with any form of currency you prefer. And while they supposedly base their underwriting on your future earnings, they also support all majors and career tracks.

13. PNC Bank

Terms (Undergraduate):

  • Variable Rates: 2.92% – 8.07 APR
  • Fixed Rates: 4.49% – 9.64% APR
  • Fees: No application, origination, or prepayment fees.
  • Loan Amounts: $50,000 annual maximum: $50,000. $225,000 lifetime maximum (including loans from other sources). 
  • Repayment Terms: 5, 10, and 15-year repayment plans. Payments start up to 6 months after graduation.

Application and Qualification: PNC doesn’t have a pre-qualification tool, so if you want to apply then you’ll have to be fine with the hard inquiry on your credit report. They require the borrower to be at least enrolled half-time, and borrowers or their cosigners must meet the typical credit and income requirements. If you want to use self-employment income to qualify, then the business must be at least two years old.

Drawbacks: Again, PNC doesn’t have a soft credit check option available. They also don’t seem to offer any forbearance options for borrowers who are facing difficulty with cash flow or employment, and their cosigner release terms are longer than average at 48 months of on-time payments.

Best For: PNC gives a .50% discount for borrowers who enroll in automatic payments, which is twice the industry average. However, interest-only payments don’t count, so you’ll need to make payments during school to qualify during that period. If you’re going to be paying while in school, PNC might be right for you.

14. Sallie Mae

Terms (Undergraduate):

  • Variable Rates: 1.25% – 11.10% APR
  • Fixed Rates: 4.25% – 12.35% APR
  • Fees: No application, origination, or prepayment fees.
  • Loan Amounts: $1,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5 or 15-year repayment.

Application and Qualification: Sallie Mae’s loan application is, as they put it, “fast and easy.” All you need to do is visit their website and provide some details about yourself and your school. They don’t disclose their minimum credit score requirements, but they do suggest most students get a cosigner, even if they have some credit, to help lower their rate.

Drawbacks: As we mentioned above, Sallie Mae doesn’t disclose their credit requirements, so it may be hard to gauge whether you or your cosigner will qualify. Additionally, they don’t allow you to choose your repayment term, so you’ll have to take what they give you. 

Best For: Sallie Mae is a well-rounded option. They have affordable rates, low fees, and some nice perks like free tutoring and credit monitoring. One of the traits that really sets them apart is their quick cosigner release (just 12 months), which is a fraction of many of their competitors’.

15. SoFi

Terms (Undergraduate): 

  • Variable Rates: 1.87% – 11.66% APR
  • Fixed Rates: 4.23% – 11.26% APR
  • Fees: No origination, disbursement, prepayment, or late fees.
  • Loan Amounts: $5,000 to 100% of your education costs (as certified by your school).
  • Repayment Terms: 5, 10, or 15-year repayment terms. Payments start up to 6 months after graduation.

Application and Qualification: SoFi offers a quick and easy pre-qualification process, so you can shop around with them without damaging your credit score. They suggest a cosigner and note that their whole application process from filling the online questionnaire to sending the money to your school takes about 4-6 weeks. 

Drawbacks: SoFi is a great all-around option for the borrower, but it’s only average for the cosigner. Cosigners can be released from their liability, but only after two years of on-time payments.

Best For: SoFi has a lot to offer, and their lack of fees, flexible repayment terms, and loyalty discounts are all appealing. Unlike some of their competitors, SoFi also offers unemployment protection so that you’re covered for up to 12 months if you lose your job. If you’re worried about potential job loss, SoFi might meet all of your needs.

16. Stride

Terms (Undergraduate):

  • Variable Rates: N/A
  • Fixed Rates: N/A
  • Fees: $10 late fee only.
  • Loan Amounts: $3,000 to $25,000 annually. $50,000 lifetime maximum.
  • Repayment Terms: 5 or 10-year repayment plan. No deferrals.

Application and Qualification: Stride is another unique case. Instead of judging you on your credit score or asking for a cosigner, they consider your academic program and income expectations when considering lending to you.

Drawbacks: Stride’s loan model functions as a percentage of your income. This is a gamble: If you make a significantly larger income than you expected, you might lose. The sharing percentage starts at 2% for every $10,000 you borrow, though they cap your repayment at twice the principal balance.

Best For: Stride’s income sharing agreements are an intriguing idea, but you’ll want to assess your other options and do the math before you commit to one to make sure that you don’t end up paying more than you would with a traditional loan. Still, they’re a welcome additonal alternative for those without a credit score or a cosigner.

How to evaluate private student loans

Private student loans differ in many ways, so it can be hard to identify which is the best option for you. But at the end of the day, three factors have the most impact on the quality of a loan.

To quickly evaluate private student loans, focus on optimizing the following:

  • Interest rate and fees: Obviously, you’ll want to try to reduce your interest rate whenever possible, but you should also be on the lookout for fees. Application and origination fees will add up quickly, and prepayment fees might not seem like an issue when you’re in college but they’ll come back to bite you after you graduate.
  • Repayment term: Your repayment term has a significant impact on the size of your monthly payment, so make sure that you find one that matches your preferences. Try to find a lender that allows you to choose your repayment term so you can work toward debt freedom at a pace that makes you comfortable.
  • Deferral options: Last but not least, pay close attention to the timing of your principal and interest payments as well as the impact that they’ll have on your APR. Make sure you choose a loan that gives you ample time to set yourself up for debt repayment after your graduation.

There are other things to consider that can impact your options, like a lender’s credit requirements or cosigner release policies, but these three are the most important, by far.

The “best” private student loans depend on your situation

The diversity of private student loan options can feel overwhelming at first, but it’s actually a good thing. Every borrower is unique, and your situation might demand a vastly different private student loan than someone else’s.

Some of the different groups you might fall into that will affect which private student loan is best for you include:

  • Borrower type: Like native student as opposed to international student or parent of a student
  • Education program: Like undergraduate, medical, or legal
  • Personal background: Such as having a low credit score or lacking a cosigner

When you’re evaluating private student loans, take into account the special considerations that are unique to your situation. Don’t settle for a generic loan if your needs are more specific.

How do you get approved for private student loans?

Private student loans are very similar to all the other traditional forms of credit that you might take out with a bank or commercial lender, and that includes the approval process.

Private lenders usually evaluate your creditworthiness based on your credit score, income (if any), and other outstanding debts. They try to put a number on how big of a risk it is to lend to you, which will be reflected in the interest rate that they offer you.

It’s easiest to get approved for a private student loan with a solid credit score, a good income, and no other outstanding debts. Of course, most students (especially undergraduate students) fail to meet at least the first two criteria. 

Can you get private student loans with bad credit?

Attending school is often predominately about becoming qualified to enter the workplace in some professional capacity. The overwhelming majority of students have had no time to build a credit score and have no source of income other than their parents.

If banks only gave student loans to those with a good credit score, the industry would be virtually nonexistent.  So yes, you can get a private student loan with bad (or no) credit, but it almost always requires you to get a cosigner to help you out.

Cosigners take on equal responsibility for the loan payments, which will make a lender feel much more comfortable about giving a student money. It can be a parent, a spouse, or even a good family friend.

Of course, they only benefit you if your cosigner has a proven credit history and a reliable source of income, so choose wisely.

What if you don’t have a cosigner?

If you don’t have a qualified cosigner to help you out, it’ll be a lot more difficult to get approved for a private loan as someone with a low or nonexistent credit score.

Still, there are a couple of options that you can try. Some lenders, like A.M. Money, MPower, and Stride will be willing to judge your creditworthiness on something other than your score.

When to choose private student loans

While the majority of student loans are held by the government, private student loans can be a helpful supplement for those who need additional financing.

Just remember that they don’t come with the same benefits as federal loans, and it’ll be difficult to consolidate your student loans into one payment if you have a mix of federal and private loans.

Still, if you’re unable to cover all of your expenses with federal student loans, it’s perfectly viable to work with a private lender. Just make sure that you know what you’re getting into and that you thoroughly explore your options before committing.