Always borrow federal student loans before private loans. Once you've exhausted federal options, compare offers from multiple private lenders to find the lowest interest rate.
Summary of Private Student Loans: Compare Earnest, Sallie Mae and More
The best student loan is one you can repay at an interest rate you can afford. For most people, that student loan comes from the government.
Even so, many borrowers wind up with a gap and turn to a private student loan from a bank, credit union or online lender. But not all lenders serve all customers. If you are an international student, don't have a co-signer, attend school part-time or attend graduate or professional school, your choices probably don't look the same as those for a more traditional student borrower.
NerdWallet student loan experts evaluated dozens of data points to identify the best student loan companies in these nine categories.
Best overall student loan: Federal direct subsidized/unsubsidized loan
Federal student loans are the best first option for all student loan borrowers. They don't require a co-signer and offer unmatched payment flexibility.
Best private student loan: SoFi
SoFi stands out for charging no fees and offering a soft credit check, competitive rates, perks, in-school repayment options and opportunities to pay off debt fast.
Best parent loans for college: College Ave
Compare private parent loan options with federal direct PLUS loans. College Ave offers parent borrowers three payment options while their child is in school, including interest-only. And unlike federal PLUS loans, there’s no origination fee.
Best private student loan without a co-signer: Ascent
Federal loans don't require a co-signer; if they are an option, use them first. Ascent non-co-signed loans are best for upperclassmen and graduate students with no credit, income or co-signer.
Best loan for part-time students: Sallie Mae
Only a few companies offer loans to students who attend less than half-time. Among those, Sallie Mae is the highest-rated lender.
Best loan for community college students: SoFi
Many lenders restrict borrowing to students at four-year schools only. Among those, SoFi is the highest-rated lender.
Best loan for bad or no credit: Ascent
Federal loans don't require credit history; neither does Ascent. Its non-co-signed loans are best for upperclassmen and graduate students with no credit, income or co-signer.
Best loan for international students without a co-signer: MPOWER
MPOWER is best for international students and students with Deferred Action for Childhood Arrivals, or DACA, status.
Best loan for international students with a co-signer: Ascent
Ascent is best for international students who want to use a co-signer and pay off loans fast.
How do private student loans and federal student loans differ?
You apply for a federal student loan by submitting a FAFSA. Taking on a federal loan means you’re borrowing a loan funded by the government. You apply for a private student loan through a bank, credit union or online lender.
Federal student loans offer borrowers protections and alternative repayment options that private loans may not, such as income-based repayment and forgiveness programs. Federal student loans also have flat interest rates set by Congress, while the interest rate on a private student loan depends on your or your co-signer’s credit. Without a credit score of at least 690, you'll likely pay a higher interest rate for a private loan than you would for a federal loan.
» MORE: How to get a student loan
How do I choose a private student loan?
Compare offers from multiple lenders including banks, credit unions and online lenders to find the lowest interest rate. Depending on the lender, you may be able to choose a fixed or a variable interest rate. A fixed rate stays the same throughout the life of a loan. A variable rate may start out lower than a fixed rate, but could increase or decrease over time depending on economic conditions.
Consider any borrower protections your private lender offers, including deferment and forbearance, as well as repayment options. You may also have the option to choose your loan term, which means you could pay off your loan faster and with less interest by making higher payments or pay lower amounts with more interest over a longer period of time.
How do I qualify for a private student loan?
Each lender will have its own requirements for taking out a loan. With most loans, credit score and income are taken into account. Higher scores and incomes tend to get the best rates or higher borrowing amounts. However, since undergraduate borrowers are less likely to have established credit or an income, lenders will usually require students to apply with a co-signer. Some lenders who have loans for borrowers without a co-signer will consider career and income potential.
Lenders will often require you to attend a Title IV school, which means your school processes federal student aid. Some lenders don't offer loans in certain states.
Can I get a private student loan with bad credit?
You’ll have a hard time finding a private student loan from a bank, credit union or online lender if you have bad credit. Federal student loans don’t require borrowers to demonstrate creditworthiness, so they’ll be your best option. If you’ve already hit your limit on federal loans, you may be able to get a private student loan if you apply with a co-signer who has solid credit — typically scores in the high 600s or better.
Will I need a co-signer for a private student loan?
If you have no income and either no credit or bad credit, you’ll need a co-signer to get a private student loan. Without bills in your name, such as a credit card, car loan or utility, you have no way to demonstrate that you can pay bills on time. Your co-signer will need to have a steady income as well as good to excellent credit scores, typically at least in the high 600s. Signing with a co-signer means they’re on the hook for your loan bill if you can’t pay.
Some lenders offer loans exclusively for student borrowers that don't take credit into consideration. Instead, these lenders look at the school you’re attending as well as your income and career potential to determine the amount you can borrow and at what rate.
How do I apply for a private student loan?
Each lender will have its own application requirements. You’ll usually need to provide documents that prove citizenship, identity and income along with school attendance and cost information or a financial aid award letter from your college.
As part of underwriting, you or your co-signer will need to show you have a credit score in the high 600s or higher, as well as cash flow to make loan payments. They’ll also look at your or your co-signer’s debt-to-income ratio to make sure you have the funds to pay a student loan bill in addition to any other bills in your name.
Find the best student loan for you
- Best private student loans for 2019
- Student loans without a co-signer
- Student loans with co-signer release
- Parent loans for college
- Student loans for community college
- Part-time student loans
- Bad credit student loans
- International student loans
- Graduate school loans
- Law school loans
- Medical school loans
- MBA student loans
Last updated on September 17, 2019
To recap our selections...
NerdWallet's Private Student Loans: Compare Earnest, Sallie Mae and More
- Sallie Mae Private Student Loan: Best for Part-time students and those who want repayment flexibility.
- Earnest Private Student Loan: Best for Payment flexibility.
- CommonBond Private Student Loan: Best for Faster payoff.
- College Ave Private Student Loan: Best for Students who want to make payments while they’re still in school.
- Ascent Private Student Loans: Best for Independent students; faster payoff.
- Citizens One Private Student Loan: Best for International students; existing Citizens Bank customers.
- SunTrust Private Student Loan: Best for Borrowers looking for an interest-only payment option after graduation.
- Discover Private Student Loan: Best for Students who may need wiggle room on payments.