Deciding between federal and private loans is a personal choice to make based on your individual circumstances. Federal student loans are the more popular option: They make up over 92% of all outstanding student debt, according to data from a June 2023 report by Enterval Analytics.
However, private student loans can still have a place in your college funding strategy, and many people take out a mix of both as each serves its own purpose.
| | |
|---|
| Access to income-driven repayment plans, forgiveness, and relief options | Borrow up to your school’s cost of attendance; Access low rates with strong credit |
| U.S. Department of Education | Banks, credit unions, and financial institutions |
| For most loans, your credit and income are not a factor | You must have good credit and stable income (or a cosigner who does) |
| Fixed; Generally lower than private loans | Fixed or variable; Generally higher than federal loans |
| 1.057% or 4.228% in 2023-24, depending on the loan type | No origination fees for most lenders;
May charge late fees or prepayment penalties |
| | |
| | |
| No (except for PLUS loans) | |
| | |
| | |
| | |
- When to take out federal student loans: In most cases, it makes sense to exhaust eligibility for federal student loans first because they come with generous borrower benefits and protections that you can't get with private loans. However, federal student loans generally have lower borrowing limits (especially for undergraduates), so they might not cover all of your costs.
- When to take out private student loans: If you max out your federal funds, private loans can be a useful way to bridge the gap. Well-qualified borrowers may also find lower rates with private student loans in some cases. While federal interest rates aren't based on your credit, rates on private student loans typically are. Those with a strong credit history may be rewarded with better rates on the private market. And if you don't have a particularly strong credit background, you can often apply with a cosigner who does.
Bottom line:
If you need to borrow money for college, federal student loans are often the best place to start, but they may not cover all of your expenses. Private student loans can help fill in the gap.
Interest rates for federal student loans are the same for all borrowers who took out a loan within a specific time frame. Rates are set by Congress and they're based on the 10-year Treasury note rate. Between July 1, 2023 to July 1, 2024, the interest rates are:
| |
|---|
| |
Direct Unsubsidized Loans (undergraduate) | |
Direct Unsubsidized Loans (graduate) | |
| |
Interest rates for private student loans vary by lender and depend on your financial profile, including your credit history, credit score, and income. Generally, opting for a shorter repayment term may also reduce your interest rate but will increase your monthly payments. Each lender determines what interest rate you can qualify for, and requirements can vary by lender. Compare private student loan interest rates from private lenders below.
Related: Credit score for student loans
Advertiser Disclosure$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Abe offers private student loans through Monogram and DR Bank, catering to undergraduates, graduates, and certificate program students. These loans are available even for those enrolled less than half-time.
Abe might be a good choice for low-income borrowers due to its generous payment relief options and rate discounts. You can extend your grace period by an additional six months, giving you more time before repayment starts. There's also an option to lengthen your repayment term by an extra five years, which lowers your monthly payments. Rate discounts are also available to reward borrowers for making on-time payments. For those facing financial hardship, Abe also offers 12 months of medical or hardship forbearance.
Abe's features are designed to offer extra support and flexibility, making it an option that students who need help managing their education costs should consider.
pros
- Rate reduction rewards for making on-time payments
- 2% loan reduction after you graduate
- No late payment fees
- Option to extend grace period and repayment term
cons
- No parent loan options
- Loans not available in CO, CT, ME, NE, TX, or WV
- Annual borrowing limit of $99,999
Minimum income
$1 (Must have positive income)
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $225,000)
Cosigner release
After 12 months of on-time principal and interest payments
Eligibility
Loans not available in CO, CT, ME, NE, TX or WV. Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a cosigner who is a U.S. citizen or permanent resident alien.
Overview
Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option.
pros
- No application or origination fees
- Autopay discounts of 0.25 to 1.00 percentage points
- 1% cash back reward at graduation
- Extended grace periods of 9 to 36 months
cons
- Higher interest rates than some competitors
- International students can’t release their cosigner
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 to $350,000 (depending on degree)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers a simple three-minute application, and has loans for nearly every borrower, from undergraduates to law school students. It's a great option for graduate students, who can take advantage of extended grace periods. The lender offers multiple repayment plans, as well as a discount of 0.25 percentage points for autopay.
With College Ave's multiyear approval program, 95% of undergraduate students who apply with a cosigner are approved for additional student loans. On the downside, borrowers must complete at least half of their repayment term before they can release a cosigner. Parent borrowers also can't fully defer loans - they must pay at least the interest during school.
pros
- Graduate loans have grace periods up to 36 months
- Offers multiyear approval for efficient borrowing
- Discount of 0.25 percentage points for autopay
cons
- Cosigner release only available after half of your repayment term
- Parents can’t defer interest payments while child is in school
- Doesn’t disclose minimum credit score or income
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
$1,000 up to cost of attendance
Overview
ELFI is a private student loan lender offering private student loans and refinancing for undergraduates, graduates, and parents. The lender, a division of Tennessee-based SouthEast Bank, offers loans starting at $1,000, with options to cover as much as the full cost of attendance.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. The lender offers multiple repayment terms and interest rates that are competitive in the industry. ELFI also provides support to borrowers through a Student Loan Advisor. You can borrow with a cosigner, but ELFI doesn't have a cosigner release option, nor does it offer any rate discounts.
pros
- One-on-one support available from a dedicated Student Loan Advisor
- Clearly discloses credit score and income required to qualify
- Wide range of repayment options
cons
- Loans only available for bachelor’s degree programs or higher
- Does not offer cosigner release
- No rate discounts for autopay
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
$1,001 up to 100% of school certified cost of attendance
Overview
INvestEd is a student loan provider that offers loans exclusively to Indiana state residents. Students in the state and their parents who can meet INvestEd's income and credit requirements, or who have an eligible cosigner, are eligible. Loans of as little as $1,001 or as much as the school's cost of attendance minus other aid are available.
Potential borrowers can find detailed information on eligibility on INvestEd's website so they can determine whether or not to apply. But there's no option to prequalify with a soft credit check that doesn't affect your credit score. Cosigners can be released after just 12 on-time payments, which is considerably less time than many other lenders.
pros
- Minimum borrowing amounts lower than some other lenders
- Offers a quarter-point rate discount for using autopay
- Cosigner release after as few as 12 on-time payments
- Qualification requirements are easy to see online
cons
- Only Indiana residents can qualify for loans
- Cannot prequalify to see rates without a hard credit pull
- International students not eligible
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) student loans fixed-rate options for undergraduate and graduate students across the country. MEFA's not-for-profit status helps it keep interest rates competitive, offering potentially lower borrowing costs than many other private lenders.
On the downside, flexibility is limited compared with some other lenders. Undergraduates can only choose between 10- or 15-year repayment terms, while graduate students must opt for a 15-year term. This might be restrictive if you're looking for more options. Cosigner release may also be a challenge. You'll need to make on-time payments for four consecutive years and meet specific credit and income criteria to release your cosigner.
pros
- No fees at any stage, including late payment fees
- Lower interest rates than many competitors
- Can cover your school’s full cost of attendance
cons
- Variable rate loans are not offered
- Fewer repayment term options than most lenders
- No autopay rate discount
- May be challenging to release a cosigner
- No option to prequalify with a soft credit check
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Overview
Nelnet Bank provides private student loans for undergraduates, graduates, and those working toward a health professional degree. The lender offers a rate discount for autopay, and it doesn't charge origination or application fees.
You must have a FICO credit score in the mid-to-high 600s or higher to be approved. If you can't qualify for a loan on your own, you can add a cosigner to your application. After making 24 consecutive on-time payments (see disclaimer), you can release your cosigner.
pros
- Offers cosigner release after 24 on-time payments
- Borrowers or cosigners with strong credit can qualify for competitive rates
- 0.25 percentage point discount for setting up autopay
- Offers deferment and payment assistance programs
cons
- Charges fees for late payments and insufficient funds
- No guarantee of deferment or forbearance
Loan terms
5,10,15* (IO, Deferred, Immediate)
Loan amounts
$1,000 to $125,000 for undergraduate, $1,000 to $175,000 for graduate, $1,000 to $500,000 for graduate health professions
Eligibility
All states and US Territories
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers a wide range of loans tailored to different needs, including those for undergraduates, graduates, MBA programs, law school, medical school, and health profession programs. It's also one of the few private lenders that provides loans for career training and trade schools.
If you apply with a cosigner, you might qualify for a lower interest rate. Sallie Mae has one of the shortest cosigner release periods—just 12 months—compared to other lenders. However, there's no option to prequalify and check your rates without affecting your credit. You'll need to complete a full application, which includes a hard credit inquiry that could temporarily lower your credit score.
pros
- Offers loans for certificate and trade school programs
- Cosigners can be released after just 12 months
- No prepayment, origination, or application fees
cons
- No prequalification options to check rates
- Must submit an application to view loan terms
- Does not offer parent loans
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
Loan Amounts
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Abe offers private student loans through Monogram and DR Bank, catering to undergraduates, graduates, and certificate program students. These loans are available even for those enrolled less than half-time.
Abe might be a good choice for low-income borrowers due to its generous payment relief options and rate discounts. You can extend your grace period by an additional six months, giving you more time before repayment starts. There's also an option to lengthen your repayment term by an extra five years, which lowers your monthly payments. Rate discounts are also available to reward borrowers for making on-time payments. For those facing financial hardship, Abe also offers 12 months of medical or hardship forbearance.
Abe's features are designed to offer extra support and flexibility, making it an option that students who need help managing their education costs should consider.
pros
- Rate reduction rewards for making on-time payments
- 2% loan reduction after you graduate
- No late payment fees
- Option to extend grace period and repayment term
cons
- No parent loan options
- Loans not available in CO, CT, ME, NE, TX, or WV
- Annual borrowing limit of $99,999
Minimum income
$1 (Must have positive income)
Loan terms
5, 7, 10, 15, or 20 years
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $225,000)
Cosigner release
After 12 months of on-time principal and interest payments
Eligibility
Loans not available in CO, CT, ME, NE, TX or WV. Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a cosigner who is a U.S. citizen or permanent resident alien.
Overview
Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option.
pros
- No application or origination fees
- Autopay discounts of 0.25 to 1.00 percentage points
- 1% cash back reward at graduation
- Extended grace periods of 9 to 36 months
cons
- Higher interest rates than some competitors
- International students can’t release their cosigner
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 to $350,000 (depending on degree)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers a simple three-minute application, and has loans for nearly every borrower, from undergraduates to law school students. It's a great option for graduate students, who can take advantage of extended grace periods. The lender offers multiple repayment plans, as well as a discount of 0.25 percentage points for autopay.
With College Ave's multiyear approval program, 95% of undergraduate students who apply with a cosigner are approved for additional student loans. On the downside, borrowers must complete at least half of their repayment term before they can release a cosigner. Parent borrowers also can't fully defer loans - they must pay at least the interest during school.
pros
- Graduate loans have grace periods up to 36 months
- Offers multiyear approval for efficient borrowing
- Discount of 0.25 percentage points for autopay
cons
- Cosigner release only available after half of your repayment term
- Parents can’t defer interest payments while child is in school
- Doesn’t disclose minimum credit score or income
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Loan Amounts
$1,000 to $99,999 annually $180,000 aggregate limit)
Overview
Citizens provides loans to undergraduates, graduate students, and parents. The lender also accepts international students, as long as they have a cosigner who's a U.S. citizen or permanent resident. The lender's multiyear approval program makes it easy to reapply for loan funds each year.
Borrowers can take advantage of an autopay discount of 0.25 percentage points, in addition to a loyalty discount if they have an existing account with Citizens. While student borrowers can defer their loan payments until six months after graduation, parents are not eligible to defer their payments.
pros
- Offers loyalty and autopay discounts
- Qualifying borrowers can take advantage of multiyear approval
- International students are eligible when they add a qualifying cosigner
cons
- Few repayment term options
- Longer cosigner release requirement than some lenders
- Can’t defer parent loans
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
Loan Amounts
$1,000 up to cost of attendance
Overview
ELFI is a private student loan lender offering private student loans and refinancing for undergraduates, graduates, and parents. The lender, a division of Tennessee-based SouthEast Bank, offers loans starting at $1,000, with options to cover as much as the full cost of attendance.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. The lender offers multiple repayment terms and interest rates that are competitive in the industry. ELFI also provides support to borrowers through a Student Loan Advisor. You can borrow with a cosigner, but ELFI doesn't have a cosigner release option, nor does it offer any rate discounts.
pros
- One-on-one support available from a dedicated Student Loan Advisor
- Clearly discloses credit score and income required to qualify
- Wide range of repayment options
cons
- Loans only available for bachelor’s degree programs or higher
- Does not offer cosigner release
- No rate discounts for autopay
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Loan Amounts
$1,001 up to 100% of school certified cost of attendance
Overview
INvestEd is a student loan provider that offers loans exclusively to Indiana state residents. Students in the state and their parents who can meet INvestEd's income and credit requirements, or who have an eligible cosigner, are eligible. Loans of as little as $1,001 or as much as the school's cost of attendance minus other aid are available.
Potential borrowers can find detailed information on eligibility on INvestEd's website so they can determine whether or not to apply. But there's no option to prequalify with a soft credit check that doesn't affect your credit score. Cosigners can be released after just 12 on-time payments, which is considerably less time than many other lenders.
pros
- Minimum borrowing amounts lower than some other lenders
- Offers a quarter-point rate discount for using autopay
- Cosigner release after as few as 12 on-time payments
- Qualification requirements are easy to see online
cons
- Only Indiana residents can qualify for loans
- Cannot prequalify to see rates without a hard credit pull
- International students not eligible
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
Loan Amounts
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) student loans fixed-rate options for undergraduate and graduate students across the country. MEFA's not-for-profit status helps it keep interest rates competitive, offering potentially lower borrowing costs than many other private lenders.
On the downside, flexibility is limited compared with some other lenders. Undergraduates can only choose between 10- or 15-year repayment terms, while graduate students must opt for a 15-year term. This might be restrictive if you're looking for more options. Cosigner release may also be a challenge. You'll need to make on-time payments for four consecutive years and meet specific credit and income criteria to release your cosigner.
pros
- No fees at any stage, including late payment fees
- Lower interest rates than many competitors
- Can cover your school’s full cost of attendance
cons
- Variable rate loans are not offered
- Fewer repayment term options than most lenders
- No autopay rate discount
- May be challenging to release a cosigner
- No option to prequalify with a soft credit check
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Overview
Nelnet Bank provides private student loans for undergraduates, graduates, and those working toward a health professional degree. The lender offers a rate discount for autopay, and it doesn't charge origination or application fees.
You must have a FICO credit score in the mid-to-high 600s or higher to be approved. If you can't qualify for a loan on your own, you can add a cosigner to your application. After making 24 consecutive on-time payments (see disclaimer), you can release your cosigner.
pros
- Offers cosigner release after 24 on-time payments
- Borrowers or cosigners with strong credit can qualify for competitive rates
- 0.25 percentage point discount for setting up autopay
- Offers deferment and payment assistance programs
cons
- Charges fees for late payments and insufficient funds
- No guarantee of deferment or forbearance
Loan terms
5,10,15* (IO, Deferred, Immediate)
Loan amounts
$1,000 to $125,000 for undergraduate, $1,000 to $175,000 for graduate, $1,000 to $500,000 for graduate health professions
Eligibility
All states and US Territories
Loan Amounts
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers a wide range of loans tailored to different needs, including those for undergraduates, graduates, MBA programs, law school, medical school, and health profession programs. It's also one of the few private lenders that provides loans for career training and trade schools.
If you apply with a cosigner, you might qualify for a lower interest rate. Sallie Mae has one of the shortest cosigner release periods—just 12 months—compared to other lenders. However, there's no option to prequalify and check your rates without affecting your credit. You'll need to complete a full application, which includes a hard credit inquiry that could temporarily lower your credit score.
pros
- Offers loans for certificate and trade school programs
- Cosigners can be released after just 12 months
- No prepayment, origination, or application fees
cons
- No prequalification options to check rates
- Must submit an application to view loan terms
- Does not offer parent loans
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
Loan amounts
$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
Eligibility
Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
Fox Business does not make or arrange loans.
Federal student loans are issued by the U.S. Department of Education. To determine your eligibility and the amount you can borrow, you must submit the Free Application for Federal Student Aid (FAFSA). You might be eligible for the following types of federal student loans depending on your family's income, assets, and size:
- Direct Subsidized Loans: Subsidized student loans are available for eligible undergraduate students in financial need, the Department of Education pays any interest that accrues while you're in school, during periods of deferment, and during the grace period after you graduate.
- Direct Unsubsidized Loans: Undergrads can qualify for a Direct Unsubsidized Loan without proving financial need. However, you're responsible for paying any interest that accrues for this loan. Graduate students can also take out Direct Unsubsidized Loans.
- Direct PLUS Loans: There are two types of these loans: PLUS loans for graduates and professional students and PLUS loans for parents. Unlike other federal options, Direct PLUS Loans require a credit check. However, those who have bad credit may still qualify for a loan.
Pros and cons of federal loans
Advantages
- The government pays interest on subsidized loans
- You’ll have access to forgiveness programs
- Federal loans are easier to qualify for
- You’ll have a competitive, fixed interest rate
- You’ll have flexible repayment options
Drawbacks
- Some federal loans are based on financial need
- Most federal loans have annual borrowing limits
- Your educational status determines eligibility
- Your interest rate may be higher than on some private student loans
- You have to pay an upfront fee
- The government may pay some of your interest: You don't have to pay for accrued interest on subsidized loans while in school or during deferment. With private loans, you're typically responsible for interest costs at all times.
- Federal loans may offer forgiveness: You may be able to get loans forgiven if you work in public service (through the PSLF program) or choose an income-driven repayment plan and make payments for a certain number of years.
- Federal loans are easier to qualify for: Your income and credit history don't matter when determining eligibility for most federal loans.
- You'll have a competitive, fixed interest rate: Your interest rate is determined based on the type of loan you borrow, not your credit or income. And your rate won't change over the life of the loan, since all federal loans have fixed interest rates.
- You have more repayment protections: You can change your repayment plan as needed, including switching to income-based plans, and you have many deferment and forbearance options.
- Some federal loans are need-based: You have to show limited family income to be eligible for subsidized loans.
- There are borrowing limits for federal loans: Both lifetime and annual limits mean you may not be able to borrow enough to fully fund your education.
- Your educational status determines eligibility: Only undergrads are eligible for subsidized loans, and students in their freshman year typically have the lowest borrowing limits.
- Your interest rate may be higher than on some private loans: Depending on the loan, your interest rate could be higher than some private loans - especially if you have excellent credit.
- You have to pay an upfront fee: There's an origination fee for all federal student loans, but not for most private student loans.
If you've exhausted your options for grants, scholarships, and federal student loans, private student loans can help you access additional money to pay for college. Private student loans are issued by banks, credit unions, and financial institutions. They're typically harder to access than federal student loans because eligibility depends on your credit score and income.
Good to know:
Most private lenders require a credit score of 670 or higher to get approved for a private student loan. If you don’t meet a lender’s credit requirements, you can apply with a creditworthy cosigner.
Related: Best Private Student Loans of 2024
Pros and cons of private loans
Advantages
- You can qualify for a low interest rate if you have strong credit
- There’s no upfront fees for most lenders
- You can borrow up to your school’s cost of attendance
- You can choose your preferred lender
Drawbacks
- A cosigner is required if you have poor credit or no credit history
- There are limited borrowers protections
- You won’t have access to federal loan forgiveness
- Monthly payments can change if you choose a variable interest rate
- You may be able to get a lower interest rate: Some private loans have lower starting rates than you would pay with federal loans, especially if you have great credit. A lower rate means smaller monthly payments and lower total interest costs over time.
- There are no upfront fees from most lenders: You typically don't have to pay an origination fee with private loans, but this can vary by lender.
- You can borrow up to the cost of attendance: Many lenders allow you to borrow up to the school-certified cost of attendance. However, some lenders may set annual or lifetime borrowing limits.
- You have a choice of many lenders: You can shop around and compare rates and terms to find a private loan that's right for you.
- You need good credit and proof of income (or a cosigner): Many borrowers - particularly younger students - may not have the income or credit to qualify for a private loan on their own. In that case, you may need to ask a loved one who has good credit and a higher income to cosign for the loan.
- There are limited borrower protections: Generally, you can't change your private loan repayment plan after you borrow (unless you refinance your private student loans). Income-based payment plans are very rare in the private marketplace, and depending on the lender, you may have few options for deferment or forbearance.
- You won't have your loans forgiven: While federal student loans offer several paths to forgiveness, that's not offered by private lenders.
- Your payment can change over time: If you choose a variable-rate loan, your rate will move according to financial benchmarks. Depending on larger economic trends, you risk your rate and payment rising unexpectedly.
Related: Best Student Loans for Bad Credit in 2024
Meet the contributor:
Christy Bieber
Christy Bieber has over 16 years in personal finance with bylines at The Motley Fool, CBS News, and USA Today.
