Best Private Student Loans and Current Rates

You apply for a federal student loan by submitting the FAFSA. Taking on a federal loan means you’re borrowing from the government. You apply for a private student loan through a bank, credit union or online lender.

Federal student loans only come with fixed interest rates — rates that are locked in for the life of the loan — that are set by Congress annually. Private lenders can offer fixed or variable rates that are based on your creditworthiness — and your co-signer’s if you have one. Federal loans also charge origination fees; private loans typically do not.

Borrowers of federal student loans get extra protections — like income-driven repayment and Public Service Loan Forgiveness — that private loans lack.

Compare offers from multiple lenders including banks, credit unions, online companies and state-based 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 other 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.

Each lender will have its own requirements for taking out a loan. Credit score and income are taken into account for most student loans. Higher credit scores and incomes tend to get the best rates and are more likely to be approved for higher borrowing amounts. Since undergraduate borrowers are less likely to have established credit or 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 academic performance 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.

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 have bad credit. 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.

If you have no income and 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, it’s hard to demonstrate that you can pay bills on time. Your co-signer will need a steady income and excellent credit scores, typically in the high 600s. Signing with a co-signer means they’re on the hook for your loan if you can no longer pay it.

Some private lenders will let students apply without a co-signer. Instead of basing your loan offer on your credit, they look at your academic performance and earning potential to determine your ability to pay back the debt.

Each lender will have its own application requirements. You’ll usually need to provide documents that prove citizenship, identity and income along with school information, like cost of attendance or the 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.

Learn more about how student loan interest rates are determined, including a history of rate changes through the years. Private student loan interest rates can sometimes be lower than federal rates, but approval for the lowest rates requires excellent credit. If you have good credit, you may be able to refinance existing student loans to get a lower rate.

Among families with college-bound students, 47% think they’ll need to borrow to finance a college education, according to Sallie Mae’s 2022 College Confidence study. Yet just under half of those families identified federal direct subsidized and unsubsidized loans as aid that needs to be repaid, underlining the importance of learning the obligations of the debt you’ve been offered before accepting it.

Additionally, those families with college-bound students aren’t clear on the purpose of the FAFSA; 34% don’t know why someone would submit the FAFSA, and 44% don’t know that it’s for everyone, regardless of income level. If you or your child are considering going to college, familiarize yourself with all of the options available to you to fund that education — and submit the FAFSA to be considered for the most aid possible.

A 2022 high school graduate who will depend on student loans to pay for college could expect to borrow $39,500 for their bachelor’s degree, according to a new NerdWallet analysis. The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has also grown significantly.

For more details, and to learn a number of ways to cut down on the amount borrowed for a bachelor’s degree before, during and after college, see the full study here.

Our survey of more than 29 banks, credit unions and online lenders offering student loans and student loan refinancing includes the top 10 lenders by market share and top 10 lenders by online search volume, as well as lenders that serve specialty or nontraditional markets.

We consider 40 features and data points for each financial institution. Depending on the category, these include the availability of biweekly payments through autopay, minimum credit score and income requirement disclosures, availability to borrowers in all states, extended grace periods and in-house customer service.

The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.