7 best private student loans of 2024

If you’ve received your financial aid package and it isn’t enough to cover your total expenses, it may be a good time to start thinking about a private student loan. These are provided by private lenders and generally require good credit (from either you or a cosigner) to qualify.

Here’s a look at popular private student lenders, and what to consider before you submit an application.

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7 best private student loans

For many student borrowers, private student loans can be more expensive than federal ones. But if you aren’t eligible for federal aid or need extra funding to cover your school costs, these loans can come in handy. Here are seven options from our partners.

Other lenders to consider

The following lenders may also be worth considering if you’re looking for a private student loan.

SoFi: Best for special benefits

SoFi offers a broad array of private student loans, including specialized products for MBA, law, and health profession students. There’s no maximum limit on the amount borrowed and SoFi doesn’t charge any fees — not even late fees.

But where SoFi really shines is in its added member benefits. Borrowers can access free financial planning services, personalized career coaching, unemployment protection, specialized travel offers, and local networking events and happy hours.

RISLA: Best for borrower protections

Founded in 1981, Rhode Island Student Loan Authority (RISLA) is a nonprofit lender that offers student loans to undergraduates, graduate students, and parents in all 50 states. RISLA has several programs that you don’t often see with other private lenders.

Borrowers experiencing financial hardship may qualify for income-based repayment, which determines your payment based on your income, state, and family size. With this plan, your loan term can be extended to 25 years, after which any remaining balance is forgiven. Students can also access a multi-year approval program, so eligible borrowers don’t have to go through the full application process each year of school.

ISL: Best for cosigned loans

Iowa Student Loan Liquidity Corporation (ISL) is a nonprofit organization that provides student loans nationally to undergrads, parents, and graduate students. Interest rates are competitive, and you can include up to two cosigners on your loan to lock in the best rates possible. Iowa and Illinois students can access specialized education loans, including no-cosigner options that come with more relaxed eligibility requirements.

For borrowers who apply with a cosigner, it’s possible to remove that cosigner after making 24 consecutive, on-time monthly payments, which is in line with what's generally required by other lenders. Borrowers also must meet the underwriting criteria in order to release their cosigner.

Methodology

We evaluated these student loan lenders based on interest rates and origination fees, loan amounts, loan terms, discounts, whether cosigners are accepted, and more. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Federal vs. private student loans

There are two main types of student loans: federal loans, which are offered by the Department of Education, and private loans, which are available through private companies like online lenders, banks, and credit unions.

Federal student loans are the most common type, making up an estimated 92% of the student loan market, according to a 2023 Enterval Analytics report. That’s because these loans come with special benefits and protections, including:

• Relatively low, fixed rates that aren’t based on your credit
• More relaxed qualification requirements
• Flexible repayment options, such as income-driven repayment plans
• Forgiveness programs for eligible borrowers

Private lenders generally can’t match those perks, but private student loans may still have a place in your borrowing plan. While federal loans may be more affordable, they also tend to come with lower borrowing limits. If you max out the federal aid available to you, private loans can help you access additional funds.

In addition, well-qualified borrowers (or applicants with cosigners who have strong credit) may be able to access lower rates on the private market. Compare all your options before deciding what type of loan is best for you.

Learn More: Federal vs. private student loans: Which should you choose?

How do you apply for a private student loan?

Before applying for a private loan, it may be wise to check your eligibility for federal loans and other aid. To do so, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). Your school will use this form to see what you qualify for and determine your financial aid package. Once you have that information, you’ll have a better idea of how much you need to borrow from a private lender.

When you’re ready to apply for a private loan, take the following steps:

1. Compare private lenders: Each lender determines your eligibility differently, and will offer you various interest rates and loan terms. By comparing multiple lenders, you can make sure you find the best loan for your situation. In addition to borrowing costs, review the repayment options, grace period lengths, and discounts offered by each lender.
2. Get prequalified: Many lenders allow you to prequalify with only a soft credit check. After inputting a few pieces of personal information, you can view the estimated rates and terms you’re likely to qualify for. This can give you a better sense of what each lender has to offer.
3. Choose a cosigner, if needed: If you know that your credit won’t be sufficient to qualify on your own, finding a cosigner is an important step. This is someone who agrees to share responsibility for your debt. By adding a cosigner who has strong credit to your application, you could get approved or access lower rates.
4. Submit an application: Once you’ve picked a lender, you can formally apply for a loan. You’ll need information about yourself, your school, as well as any cosigner to get it done.
5. Sign your loan agreement: If approved, you can review your loan offer and, if desired, sign your loan documents. This will make everything official.
6. Wait for disbursement: Your lender will send the loan funds directly to your school, which will apply the money to any outstanding tuition and fees. Any extra cash left over can be distributed to you.

Pros and cons of private student loans

Benefits

• Rates could be lower than what you’ll find with federal student loans, particularly for well-qualified applicants.
• Most private lenders don’t charge origination fees — which isn’t the case for federal loans.
• Many private loans come with higher borrowing limits.
• Borrowers can be rewarded for having excellent credit.
• Borrowers have the potential for shorter loan terms than federal options.
• Some lenders may offer special discounts or customer benefits.

Drawbacks

• You typically won’t have access to federal protections, like income-driven repayment plans.
• Private lenders may not allow for multiple deferment or forbearance periods.
• For borrowers with poor or average credit, private loans may be more expensive compared to federal options.
• Private loans don’t provide a path to student loan forgiveness.

Fixed vs. variable rates: What to know

Many private lenders allow you to choose either a fixed- or variable-rate loan. These have significant differences, and can greatly affect the total cost of your debt.

• Fixed rates: These stay the same over the life of your loan, so they’re extremely predictable. You’ll easily be able to project out your total cost of borrowing, and your monthly payment won’t change.
• Variable rates: These can fluctuate with the market, and will rise or fall depending on larger economic benchmarks. There’s the potential to save money, but you could also pay more in the long term if the market takes a dive.

Which private student loan is best for you?

The right loan for you depends on your needs and your situation. For example, if you’re looking for the most savings, the interest rate might be the most important factor, since it determines long-term costs. But if you plan on going into a profession that has a low starting salary, you might be more interested in things like repayment options and grace periods.

Before taking out any loan, make sure you consider factors like:

• How much you’re able to borrow
• How long you have to repay the loan
• What your monthly payment and lifetime costs will be
• Your interest rate
• Fees and discounts
• Available repayment plans
• When you’re required to start making payments
• How the lender may help if you later have trouble affording your payments
• Cosigner policies, including the option to release a cosigner later
• The lender’s reputation and customer service options

Private student loan FAQ

Do private student loans affect financial aid?

Private student loans are separate from federal, state, or school-based financial aid. But because your financial aid package (including federal loans) may be based — at least partially — on your financial need, consider waiting to apply for private loans until you’ve sent in your FAFSA and have your financial aid package in hand.

Is a parent PLUS loan better than a private loan?

It depends. Parent PLUS loans are a type of federal loan offered only to parents of undergraduates, while a private loan can be taken out by a student via a private lender.

While many private lenders offer the opportunity to get a fee-free loan, parent PLUS loans always have an origination fee (it’s currently set at 4.228%). In addition, PLUS loans carry the highest federal interest rate, sitting at 8.05% in the 2023-24 school year.

Borrowers with excellent credit may get a lower rate on the private market, but you wouldn’t be able to access federal protections like income-driven repayment or forgiveness opportunities. Thoroughly compare private and federal loans before making a decision.

Can you get a student loan without a cosigner?

Yes. If you have sufficient credit, a private lender will allow you to take out a loan without a cosigner.

However, many undergraduate students simply don’t have the required credit history to borrow on their own. Using a cosigner is very common — more than 90% of private loans were cosigned, often by a parent or grandparent, according to data from the Consumer Finance Protection Bureau (CFPB). Even if you can qualify for a loan on your own, including a well-qualified cosigner can help you access lower rates and better terms.

Note that most types of federal loans don’t require a credit check or cosigner, so it’s easier for young students to access these loans on their own.

Do private student loans affect your credit score?

Yes, a private student loan can affect your credit just like any other type of debt.

Once you submit a formal application, a hard inquiry is added to your credit profile, which can slightly impact your score. And once you enter repayment, any late or missed payments could adversely affect your score. (Signing up for autopay can help here.) However, making consistent on-time payments can help your credit score.

Can you get a student loan with a 600 credit score?

In general, student lenders want to see a credit score in the mid- to high-600s to qualify for a private loan. However, if your score is lower than that, you may still qualify by adding a cosigner with solid credit.

Some student lenders cater specifically to borrowers with poor credit, or use alternate factors like your GPA or degree program to gauge your eligibility. However, these loans typically come with much higher interest rates and less favorable terms.

How do you qualify for a private student loan?

Unlike most federal loans, private student loans typically depend on your credit. You’ll generally need good-to-excellent credit to qualify, in addition to a verifiable income source.

Is there private student loan forgiveness?

Typically, no. Private student loan forgiveness doesn’t exist with most lenders, though many will discharge the loan if the borrower dies or becomes seriously disabled. Private loan borrowers may also be eligible for forgiveness through state-based assistance programs, though these typically require you to work in a high-need career for several years to qualify.