Best Private Student Loans

Although private student loans typically aren’t a student borrower’s first choice, there are several situations where private student loans can be helpful.

They can fill funding gaps when the other financial resources fall short. If you’re a graduate student or parent with good credit, a private student loan might be more affordable long term.

Our team of financial experts reviewed and ranked more than 30 online lenders to help you get funded. Here’s a look at the private student loan lenders who earned a spot on our top ten list.

It’s smart to research your options before you take out a private student loan or any other type of financing. Consider these parameters our experts used to rank the best private student loan lenders as you make comparisons.

• Qualification Criteria: Before you apply for a loan, confirm whether you can satisfy a lender’s qualifications such as minimum credit score, debt-to-income (DTI) ratio limits, and others.
• Interest Rates and Fees: Calculate the interest rates and fees a lender charges to decide if their loan is a good deal.
• Loan Features: Letails like repayment terms, maximum loan amount, funding speed, and loan use flexibility to decide if a loan is right for your situation.
• Application Process: Determine if there’s a user-friendly online application process or you can prequalify for financing with a soft credit inquiry that won’t hurt your credit score.
• Customer Support: A lender that offers several convenient customer support channels (i.e., phone, chat, email, etc.), could make the repayment process easier to navigate over the loan term.
• Online User Reviews: Check online reviews for for an excessive number of complaints and red flags.
• Perks and Bonuses: Some private lenders may offer borrower benefits like user-friendly apps, payment flexibility, and unemployment protection.

Best Private Student Loans for 2022 - Full Overview

Below is our list of the top 10 private student loan lenders for 2022.

What is a Private Student Loan?

A private student loan is a one that comes from a lender like a bank, credit union, or finance company. Since the government doesn’t issue these loans, they’re often called “non-federal student loans.”

You typically use private student loans to pay for educational costs like tuition and fees. But, more flexible private lenders may let you borrow funds for other college expenses like textbooks, room and board, and even childcare.

How Do Private Student Loans Work?

Private student loans are a tool that undergraduate students, graduate students, and parents can use to help cover the cost of educational expenses. To qualify you for this type of financing, a private lender will review your credit report, credit score, income details, and other credit criteria, which may vary by lender. You must satisfy a lender’s minimum approval requirements in each category to qualify.

Students are often unable to qualify for private student loans on their own due to lack of credit or income limitations. The Consumer Financial Protection Bureau reports that 90% of new private student loans require a cosigner, and parents or grandparents often are the ones who often fill this need.

Private Student Loan vs. Federal Student Loan: What’s The Difference?

Most people rely on federal student loans first to finance college-related costs. The differences below between federal and private student loans show why private student loans often are a secondary funding source for college.

• Federal Benefits: Many federal student loans come with protections like in-school deferment, forbearance,income-driven repayment plans, and loan forgiveness. Private student loans may not offer these.
• Credit Requirements: Good credit is essential for getting a private student loan at an affordable rate. While lenders consider your credit history and credit score for private student loans, credit scores aren’t required with most federal student loans. If you're getting a Grad PLUS or Parent PLUS loan from the federal government, you can't have an adverse credit history.
• Borrowing Limits: Federal student loans come with annual and overall loan limits that might not cover all your educational expenses. Some private lendersoffer loans that cover up to 100% of college-related expenses.
• Repayment: Private student loan repayment varies by lender. But, sometimes, lenders require immediate repayment, meaning students or parents must start paying off the loans while students are still in school. With federal loans, you can get an in-school payment deferment. Repayment doesn’t begin for most federal loans until six months after the student leaves school or drops below half time.

Reasons to Get a Private Student Loan

Although most student loan borrowers start with federal student loans, there are several reasons you might want to consider a private student loan.

• You’re ineligible for federal student aid: More than 43 million borrowers have federal student loan debt, but not everyone who applies for a federal student loan qualifies. International studentsaren’t usually eligible for federal student loans. And if your GPA falls below your school’s cutoff (often around 2.0), you might not be eligible for new federal student loansr. A private student loan could help you finance college costs in situations where federal student aid isn’t available.
• Fill funding gaps: Even if you are eligible for federal student loans, annual loan limits may mean those funds won’t cover all your educational expenses. A private student loan can help fill funding gaps, and may be used to pay for expenses like tuition and fees, books, supplies, childcare, transportation, study abroad costs, and room and board.
• You might get a lower interest rate: A private student loan is it may save you money. You have to accept whatever interest rate the federal government offers when you borrow from them. Competition between private lenders may mean you can getmore affordable student loans, especially if you have good credit.

How To Get a Private Student Loan?

The process of taking out a private student loan is different from lender to lender. Below are some general steps you may need to take to apply for, qualify for, and receive this type of financing.

1. Prequalify. Some lenders may prequalify you for a private student loan with a soft credit inquiry, which does not lower your credit score.
2. Apply. After you prequalify, you’ll likely need to complete the full student loan application to borrow money. The details you must share on your loan application include personal identifying information like your legal name, social security number, date of birth, credit history and other financial information school details, and your requested loan amount. You’ll need to include your cosigner’s details too, if you apply with one.
3. Wait. Many lenders will respond to your application right away with an approval or denial. If you’re approved for a private student loan and you’re satisfied with the offer, you’ll need to review and accept the loan terms.Depending on the lender’s process, it may take a few days to a few weeks for your school to receive the funding.

How Do Student Loan Interest Rates Work?

Private student loan interest rates come in two varieties—fixed and variable. Here’s a basic overview of each type of interest rate.

• Variable interest rate: student loans often feature lower starting APRs than fixed-rate loans. For example, variable-rate loans might start at 1.30% APR and fixed-rate loans might begin at 3.20%. But with variable loans, your interest rate could go up over time. If interest rates increase, you might pay more over the life that loan than you would with a fixed interest rate.
• Fixed interest rate: student loans APRs remain constant throughout the loan term. These loans offers predictable payments and interest. But starting APRs tend to be higher and you might miss out on potential savings if interest rates decline during your repayment term.

Pros and Cons of Private Student Loans

Before you apply for private student loans, it’s important to examine their benefits and drawbacks. Here are some pros and cons of private student loans.

Private student loans aren’t the first funding choice for many students. Yet these types of loans could still be an essential option for financing educational costs for certain students.

If you need supplemental funding for college or graduate school, or if you’re a parent who wants to borrow for your child’s education, a private student loan might benefit you. These loans also might benefit those who want to refinance existing loans to a lower interest rate.