Most students rely on federal aid to cover the cost of college. But when federal student loans, grants, and scholarships aren’t enough, a private student loan might help you get the extra cash you need to pay for your educational expenses.
Reviewed by: Dahna Chandler, Award-Winning Business Finance Journalist and Brand Storyteller
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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.
Best Private Student Loans for 2023 - Full Overview
Below is our list of the top 10 private student loan lenders for 2023.
Earnest - Best Overall
Earnest offers the best overall private student loan among all the lenders we reviewed. The lender’s combination of affordable interest rates, no fees, and longer-than-average grace period before repayment begins got them this designation.
The annual percentage rate on private student loans with Earnest starts at 3.24% (including a 0.25% auto pay discount). Variable APR loans start at 0.94% when you factor in the lender’s auto pay discount.
You’ll need a credit score of at least 650 to qualify for a private student loan with Earnest—a requirement that’s more lenient that some other lenders. Borrowers have four repayment options, including total payment deferment or a fixed $25 per month payment while in school. You can also request to skip one payment every 12 months and keep your loan in good standing.
Eligible undergraduate and graduate students, along with parents, can use private student loans from Earnest to pay for educational expenses. If you (or your cosigner) has good credit, you might qualify for a low APR that’s hard to beat elsewhere.
Sallie Mae - Best for Student Loans with a Cosigner
Sallie Mae is the best student loan for borrowers who need a cosigner. After graduation you can apply to release your cosigner once you make just 12 on-time payments (principal and interest), provided you’ve built good enough credit to take over the debt on your own.
The APRs that Sallie Mae offers range from 3.75% to 12.85% for fixed loans. Variable APR loans range from 1.62% to 11.73%. Both types of loans feature no fees for origination or prepayment.
Sallie Mae doesn’t share its minimum credit score requirement. Repayment terms range from 10 to 15 years, and the lender offers three different payment options. The initial funding process usually takes 10 business days from your loan application to disbursement.
If you plan to use a cosigner for a private student loan, Sallie Mae could be a solid choice. Cosigning for a student loan can be risky, but Sallie Mae gives borrowers the opportunity to apply for a cosigner release as soon as 12 months after beginning loan payments.
PenFed is the best private student loans for parents. The lender’s ranges from 5.49% to 7.68%—a lower maximum interest rate than you might find with federal Parent PLUS Loans and other lenders. Potential borrowers (parents or otherwise) can check rates online with a soft credit inquiry that won’t impact credit scores.
The federal credit union partners with Ascent and Purify to offer all its student loans with no origination or application fees. Early payoff doesn’t come with prepayment penalties either.
PenFed also allows eligible married couples to refinance their student loans together into a new single loan.
PenFed offers private student loans of $7,500 to $500,000 to borrowers with at least a 670 credit score. The repayment terms are 5, 8, 12, or 15 years. If financial problems arise, the lender will work with borrowers on a case by case basis to provide forbearance or deferment options.
The Bottom Line
PenFed could be a good choice for parents looking to refinance or bypass expensive Parent PLUS Loans. Married couples who want to combine their student loans into a single account might work with the lender aw well.
College Ave is the best private lender for medical school loans. Eligible medical students may qualify for a private student loan with the option to defer payments for up to 36 months after graduation.
Annual percentage rates on medical school loans with College Ave range from 1.99% to 10.45% (variable) or 3.99% to 11.46% (fixed). There are no origination fees and you can borrow for a variety of educational expenses—from tuition and fees to room and board.
College Ave doesn’t disclose minimum credit score requirements on its website. But the lender allows some borrowers to set up their repayment terms from for between five and 20 years. Repaying principal and interest right after you get the loan you could lower your costs significantly. However, the lender also offers deferred payment options during school and medical residency.
College Ave may be a good choice for medical students who need to supplement federal student loans. The lender’s competitive rates and flexible repayment terms might also make it a good fit for undergraduate and graduate borrowers.
If you need to borrow money for community college costs, Credible may be the best lender for those loans. Credible is an online student loan marketplace. Its platform makes it easier to compare loan options for undergraduate studies at community college, and universities. When you get a loan through the platform, Credible earns a commission from the lender.
Variable APRs from Credible’s lending partners range from 1.13% to 11.98%. Get fxed-rate private student loans through the platform with APRs between 3.20% and 14.52%.
If you have a 670 credit score and meet its other qualifications, you may be able to borrow up to 100% of your educational costs from Credible. You can use loan proceeds for community college, medical school, MBA program, law school expenses, and refinancing. Because Credible offers loans from multiple lenders, repayment terms may vary.
Credible could work well for community college students, university students, and parents. However, it’s important to do your own research into a lender before you move forward with a loan offer through the online platform.
Education Loan Finance (ELFI) - Best for MBA Student Loans
Education Loan Finance or ELFI provides several attractive graduate loan options including MBA student loans. Students enrolled in an MBA degree program (at least half time) can borrow between $10,000 up to the amount approved by their school for qualifying education expenses.
Interest rates with ELFI start as low as 1.30% (variable) or 3.20% (fixed). There are also no application, origination, or prepayment fees.
Repayment terms with ELFI range from 5-15 years for MBA loans. Borrowers or cosigners need a minimum credit score of 680 to qualify.
The Bottom Line
ELFI specializes in private loan funds for for MBA students, but undergraduate students and graduate students pursuing different degrees might consider ELFI as well. The lender also might be ideal for parents, and those who need to refinance existing high-interest student debt.
MPower Financing - Best for International Student Loans
Securing student loans can be challenging for international students who wish to attend college in the United States. Butinternational students may be able to qualify for a private student loan from MPower with no collateral, no cosigner, and no credit history.
If you’re an international or DACA student in the U.S. and you qualify for all discounts, your APR on an MPower loan may be as low as 12.49% (undergraduate) or 10.49% (graduate). Domestic students may be eligible for discounted interest rates as low as 6.49% (graduate) or 8.49% (undergraduate). MPower also charges a 5% origination fee.
You don’t need any established U.S. credit history or a credit score to qualify for a private student loan with MPower. The lender does require borrowers to make interest-only payments while still attending school. Regular payments of interest and principal begin six months after graduation, and last for a 10 years.
The Bottom Line
MPower private student loans may be a suitable option for international or DACA students—especially those without a cosigner or U.S. credit history. Domestic students with good credit, however, may find more affordable loan options elsewhere.
Discover rewards student borrowers who earn good grades. Eligible borrowers who maintain a 3.0 or higher GPA may earn a 1% cash reward (based on their loan disbursement amount) for each new loan.
Discover charges a variable APR of between 1.79% and 11.24% (with discounts) and a fixed rate between 4.49% and 13.34% (with discounts) on its loans. Borrowers pay no late fees, application fees, and origination fees.
Discover doesn’t share minimum credit requirements, but eligible undergraduate students, graduate students, and parent borrowers can borrow up to 100% of school costs. epayment of 10 years for undergraduate loans and 20 years for graduate loans.
The Bottom Line
Students who earn good grades might consider a private student loan from Discover. But, compare interest rates and terms from other lenders first to make sure Discover is your best option.
For those with good credit, Navient is best for refinancing higher interest loans into ones with a lower APR. The lender also charges no fees when you refinance with them.
Navient offers refinancing for student loans through NaviRefi, working with the online lender Earnest. It offers borrowers variable APRs between 1.74% and 7.99% and fixed interest rates from 2.44% to 7.99%. The lowest rates include a 0.25% auto pay discount.
Qualified applicants can refinance student loans between $5,001 and $500,000 with a credit score of 650 (or 700 if you’re a non-graduate). Borrowers can’t have any bankruptcies or recent collections on their credit report andco-signers aren’t allowed at this time.
Loan repayment terms may vary depending on the type and amount of student debt getting refinand. But the lender does offer several repayment options for pausing, reducing, or receiving forgiveness or discharge if for eligible borrowers.
The Bottom Line
If you have good credit and can qualify for a lower interest rate, a student loan refinancing through Navient might be a good choice. The lender’s promise of no fees and multiple repayment options are solid perks also make this refinancing option worth considering.
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: Details 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 - Main Features
Min. credit score
Up to 100% of college costs
3.24%-13.03% (with auto pay)
0.94%-11.69% (with auto pay)
$1,000 and up
670 (with eligible co-signer)
$7,500 to $500,000
Up to 100% of college costs
$1,000 and up
3.47%-11.16% (with auto pay)
1.89%-11.92% (with auto pay)
Up to 100% of college costs
$1,000 and up
Starting at 3.20%
Starting at 1.30%
Options available for no credit
$2,001 to $100,000
6.49% and up (after discounts)
Up to 100% of college costs
$5,001 to $500,000
1.74%-7.99% (with auto pay)
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.
Prequalify. Some lenders may prequalify you for a private student loan with a soft credit inquiry, which does not lower your credit score.
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.
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.
Interest rates may be lower on private student loans compared to federal loans.
You may qualify for private loans even if you’re ineligible for federal student aid.
Private student loans often have higher loan limits (or no limits at all).
You can choose between different loan options and different types of interest rates.
Private student loans may not feature federal protections like income-based repayment plans, in-school deferment, or forbearance options.
You may need good credit to qualify for a private student loan, especially for the lowest interest rates.
More than 90% of new private student loans require cosigners.
Ninety percent of people who apply for a cosigner release from a private student loan get rejected.
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.
How can I get private student loans cheaper?
There are a few strategies you can use to save money on private student loans. First, make sure your credit is in its best condition. Excellent credit scores unlock the lowest interest rates.
Finally, be shop around and compare loan offers from several lenders to ensure you’re getting the best private student loan for your situation.
What is a good APR for student loans?
According to the Education Data Initiative, the average student loan interest rate (federal and private) is 5.8%. Until September 1, 2022, the interest rates on federal student loans have been set to 0%.
According to the latest estimates for private student loans, the average interest rate ranges between 6% and 7% . So, if you can get a fixed interest rate that’s lower than average, you may consider your APR to be “good.” Again, it’s smart to shop around before you accept any loan offer.
Is Sallie Mae federal or private?
Sallie Mae is a private student loan lender. The company does not service nor issue federal student loans.
Who qualifies for a private student loan?
Lenders must feel confident that you’ll repay the money you borrow according to the terms of your loan agreement.
You must satisfy a lender’s borrowing requirements including:
Minimum Credit Score
Acceptable Credit History
Verifiable Minimum Income
A lender may also have rules regarding a borrower’s age and citizenship status.
Do you need a cosigner for a private student loan?
When you can’t meet a lender’s borrowing criteria on your own, you might still qualify for a private student loan with a creditworthy cosigner. If your credit score or income is low, or your DTI ratio high, a cosigner could help you qualify for some private student loans or perhaps better borrowing terms.
Do private student loans allow deferment or forbearance?
While deferment and forbearance options are standard with most federal student loans,private student loans may not provide the same protections. When offered, payment postponement programs or forbearance may vary widely among lenders.