Looking for the best private student loans? We’ve rounded up information on the top private student loan lenders below.
| Lender | Rates | Loan Term (years) | |
|---|---|---|---|
 | Fixed: 5.25%+¹ Variable: 3.80%+¹ | 5, 10, 15¹ | Get Rates |
Loan products • Undergraduate, graduate, and parent loans • Fixed and variable interest rates Loan amounts • $1,000 up to $170,000 Eligibility • Must be a U.S. citizen or permanent resident • Must be enrolled at least half-time in a degree-granting program at an eligible institution • International students can apply with a creditworthy U.S. citizen or permanent resident co-signer |
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 | Fixed: 5.31%+ Variable: 3.54%+ | 8, 10, 12, 15 | Get Rates |
Loan products • Undergraduate and graduate loans • Fixed and variable interest rates Loan amounts • $2,000 up to 100% of your school-certified cost of attendance Eligibility • Available to all US residents that attended an eligible undergraduate or graduate school • Students with little or no credit history will benefit from having a creditworthy co-signer |
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 | Fixed: 5.40%+ Variable: 3.91%+ | 10, 15 | Get Rates |
Loan products • Undergraduate and graduate loans • Fixed and variable interest rates Loan amounts • Undergraduate: $2,000 up to $500,000 • Graduate: $2,000 up to $150,000, $200,000 for an MBA/Law Degree, and $250,000 for a Medical/Pharmacy Degree Eligibility • Must be a U.S. citizen or permanent resident • Student must be admitted to or enrolled at least half-time at an eligible institution when applying • must meet credit criteria, or add a cosigner who meets the cosigner requirements |
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 | Fixed: 6.49%+ Variable: 4.99%+ | 15, 20 | Get Rates |
Loan products • Undergraduate and graduate loans • Fixed and variable rates Loan amounts • Up to 100% of your school-certified tuition, housing, books and more, up to aggregate loan limits Eligibility • Must be a U.S. citizen or permanent resident • Must be enrolled at least half-time in a degree-granting program at an eligible institution • Must be making satisfactory academic progress as defined by your school More details about Discover student loans |
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 | Variable: 4.63%+ | 20 | Get Rates |
Loan products • Undergraduate and graduate loans • Variable rates only Loan amounts • Undergraduates: $1,000 ($3,000 for Georgia residents) up to $100,000 • Graduates: $1,000 ($3,000 for Georgia residents) up to $150,000 Eligibility • Must be a U.S. citizen or permanent resident • Borrower or cosigner must have at least 3 years of positive credit history and annual income of $18,000 or greater • Must be enrolled at least half time in an iHELP eligible school |
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 | Fixed: 5.02%+ Variable: 2.98%+ | 5, 10, 15 | Get Rates |
Loan products • Undergraduate and graduate loans • Fixed and variable rates Loan amounts • $1,001 up to 100% of your school-certified cost of attendance Eligibility • Only available to all Indiana residents and available to all US residents attending an eligible Indiana school • vailable to all Indiana residents and available to all US residents attending an eligible Indiana school |
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 | Variable: 5.71%+ | 5, 7, 10 | Get Rates |
Loan products • Undergraduate and graduate loans • Variable rates only Eligibility • The raise^ private student loan program is available only to students with a permanent residence in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, South Carolina, Tennessee, Texas, Washington or West Virginia and cosigners in any state except Wisconsin • Must be a U.S. citizen or permanent resident • Must be earning income (or apply with a cosigner who is) • Available to students enrolled at least half-time at an eligible institution |
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 | Fixed: 5.74%+2 Variable: 3.87%+2 | 5-152 | Get Rates |
The table above lists the lenders we have vetted for their breadth of product coverage, product attributes, customer experience, financial stability and legal compliance. For a longer list, keep reading to find more information we’ve collected on 24 total private student loan companies.
Need to finance your next semester?
Credible simplifies student loan shopping by letting you compare rates from top lenders and find the best private student loans in minutes.
If you’re a parent looking to cover your children’s education costs, compare the best parent loan options here.
Having a cosigner helps
When shopping for private student loans, keep in mind that you’ll often need a cosigner to qualify. Having a parent, relative, friend or employer as a cosigner can also help you get a better rate on private loans for college.
Many lenders will allow you to apply to have your cosigner released after you’ve established a track record of repaying your loan. Depending on the lender, you’ll be able to apply for cosigner release after 12 to 48 monthly payments, but typically the request will only be approved if the borrower is able to meet the lender’s income and credit underwriting standards.
Compare rates, terms and benefits of the best private student loans available
In today’s low-interest rate environment, private student loans are increasingly competitive with government loans — particularly costlier federal PLUS loans for parents and graduate students that are often used to fill education funding gaps.
The complete list of private student lenders below includes information on rates, terms, eligibility, and borrower benefits offered by each. Unlike PLUS loans, there are no origination fees with many private school loans. Also, many private student loans have reduced interest rates when borrowers agree to automatic monthly payments.
Before shopping for a private student loan, make sure you’ve filled out the Free Application for Federal Student Aid (FAFSA) and taken advantage of all of the scholarships and federal, state, and institution-based grants and aid that you qualify for.
While rates on government student loans are fixed for life, many private student lenders offer both variable- and fixed-rate loans. Initial rates on variable-rate loans are typically lower, but are tied to benchmarks like the prime rate and LIBOR, and can move up and down with changes in the market. Make sure you understand the pros and cons of variable and fixed-rate loans before choosing a loan that’s right for you.
Some of the private student lenders below may also offer student loan refinancing. If you’re interested in refinancing student loan debt, check out our list, “The 19 best student loan consolidation and refinancing companies in 2018″.
The full list of private student loan companies
Bank of North Dakota (BND)
Offering: DEAL Student Loan for graduates and undergraduates
Minimum loan amount: $500
Maximum loan amount: $50,000
Terms: 10-year standard repayment term, or up to 25 years for loan balances of $30,000 or more.
Eligibility:
- North Dakota residents attending school in or out of state, or out-of-state resident attending a North Dakota school
- Graduate or undergraduate student
Benefits and features:
- No fees for North Dakota residents or out-of-state residents attending North Dakota schools
- 0.25 percentage point rate reduction for autopay
- 6-month grace period
- Several repayment options (standard, extended, graduated, extended graduated)
- Creditworthy borrowers may apply for cosigner release after 24 consecutive payments
Citizens Bank
Offering: Citizens Bank / Citizens One loans for undergraduates, graduate school students, and parents
Minimum loan amount: $1,000
Maximum loan amount: Up to $90,000 for undergraduates, $110,000 for grad school, $130,000 for business and law school, $170,000 for medical and dental school
Terms: 5, 10 or 15 years.
Eligibility:
- U.S. citizen or permanent resident
- Enrolled at least half-time in a degree-granting program at an eligible institution
- Good credit or have a qualified co-signer
Benefits and features:
- Borrowers who meet credit and eligibility guidelines can apply for cosigner release after 36 consecutive monthly payments
- 0.25 percentage point interest rate reduction for borrowers with Citizens account when application submitted
- 0.25 percentage point interest rate reduction with autopay authorization from any bank account
- Repayment options include interest-only payments while in school, or deferred payments (grace period with no payments until six months after leaving school).
College Ave
Offering: College Ave Student Loan for undergraduates and grad students.
Minimum loan amount: $2,000
Maximum loan amount: Up to 100 percent of school-certified cost of attendance minus other aid.
Terms: 8, 10, 12 or 15 years
Eligibility:
- Borrower or cosigner must be U.S. citizen or permanent resident
- Attending a participating degree-granting institution
Benefits and features:
- Borrowers can apply for cosigner release after making 24 consecutive on-time principal and interest payments. Borrower must demonstrate income for the previous two years that is more than twice the outstanding balance of all their loans with College Ave Student Loans.
- Four repayment options — Full principal and interest while in school; interest-only while in school; flat $25 a month payment while in school; defer payments until after graduation.
- No origination fee
Commerce Bank
Offering: Your Future Education loan from Sallie Mae for undergraduates and grad students.
Minimum loan amount: $1,000
Maximum loan amount: Up to 100 percent of school-certified cost of attendance minus other aid.
Terms: 5 to 15 years
Eligibility:
- Borrower or cosigner must be U.S. citizen or permanent resident
- Attending a participating degree-granting institution
Benefits and features:
- Borrowers who meet credit requirements can apply for cosigner release after making 12 consecutive on-time principal and interest payments.
- Three repayment options — while in school, pay $25 each month or pay the interest due. Or defer your payments until after graduation.
- No origination fee
CommonBond
Offering: CommonBond MBA student loan
Maximum loan amount: Up to 100 percent of school-certified cost of attendance minus other aid, $110,000 annual limit.
Terms: 10 or 15 years
Eligibility:
- Borrower or cosigner must be U.S. citizen or permanent resident
- Must be a full-time graduate student at a school in CommonBond network
Benefits and features:
- If a cosigner is required, will not lower interest rate.
- Two repayment options: Full deferment of interest and principal while in school and for an additional grace period of up to six months, with maximum deferment of 32 months followed by 10-year or 15-year repayment period. Or full principal and interest payment can begin immediately.
- 2% origination fee, no penalty for early prepayment.
CU Student Choice
Offering: Undergraduate and grad school loans from participating credit unions nationwide.
Minimum loan amount: $1,000
Maximum loan amount: Up to the school-certified cost of attendance, minus any other financial aid awarded.
Terms: Varies by credit union
Eligibility:
- Must be a member of the credit union originating and funding the loan. Credit union membership requirements may include where you live, place of employment, or the school you are attending.
- Nearly 2,000 eligible U.S. schools and campuses.
Benefits and features
- No origination, prepayment and application fees
- Competitive rates
- 0.25 percentage point rate reduction for autopay
Discover Student Loans
Offering: Private student loans for undergraduates, grad school, law school, health professions, residency, and bar exams.
Minimum loan amount: $1,000
Maximum loan amount: Up to 100 percent of school-certified cost of attendance (including tuition, housing, and books) minus other financial aid.
Terms: 15 years for undergraduate loans, 20 years for graduate school loans.
Eligibility:
- Enrolled at least half-time in a bachelor’s or associate’s degree program at an eligible school
- Be seeking a degree
- Borrower or cosigner must be U.S. citizen or permanent resident
Benefits and features:
- Reward for good grades — one-time, 1% cash reward on each new loan for 3.0 GPA
- 0.25 percentage point rate reduction for autopay
- Monthly payments not required until 6 months after graduation or enrollment drops below half-time. Or make $25 fixed, monthly payments while in school and during grace period to lower overall loan cost
- Discover student loans review
Finance Authority of Maine
(FAME)
Offering: Maine Loan for undergraduate and grad students; Maine Medical Loan for medical school students
Minimum loan amount: $1,000
Maximum loan amount: Up to the school-certified cost of attendance, minus any other financial aid awarded.
Terms: 10 or 15 years; payments on medical school loans can be interest-only or deferred for 4.5 years.
Eligibility:
- Student must be a Maine resident attending an approved school at least half-time in the United States and Canada, or an out-of-state student attending approved schools at least half-time in Maine
- Borrower or cosigner must be U.S. citizen or permanent resident
Benefits and features
- 0.25 percentage point rate reduction for auto pay
- Six month grace period
- No application fee
- No prepayment penalty
Higher Education Student Assistance Authority / New Jersey College Loans to Assist State Students (NJCLASS)
Offering: NJCLASS loans for undergraduates and grad students
Maximum loan amount: Up to cost of attendance, less any financial aid.
Terms: 10, 15, 20 or 25 years.
Eligibility:
- New Jersey residents attending eligible schools (in-state or out-of-state)
- Out-of-state students attending eligible school in New Jersey
- Enrolled at least half-time
Benefits and features:
- No loan administration fee on variable-rate loan
- Some fixed-rate loans offer option to defer payments or make interest-only payments while still in school
Higher Education Servicing Corporation (HESC) Texas Extra Credit Education Loan
Offering: Texas Extra Credit Education Loan
Minimum loan amount: $1,000
Maximum loan amount: Up to school-certified cost of attendance, minus any financial aid, $65,000 annual and $150,000 lifetime limit (includes all student loan debt).
Terms: 10, 15 years.
Eligibility:
- Borrower must be enrolled at least half-time at an approved school
- Student borrower and any cosigner must be Texas residents, student can attend any approved U.S. college or university
- Applicant or cosigner must provide proof of current income
- Student borrower and any cosigner must be U.S. citizens or lawful permanent residents.
Benefits and features
- Graduation benefit 0.25% interest rate reduction
- Autopay benefit 0.25% interest rate reduction
- Borrower can apply for cosigner release after 24 consecutive monthly payments
iHELP
Offering: iHELP Private Student Loans
Minimum loan amount: $1,000 ($3,000 in Georgia)
Maximum loan amount: $100,000 (undergraduate), $150,000 (graduate school)
Terms: 20 years
Eligibility:
- Borrower or cosigner must have at least 3 years of credit history
- Borrower or cosigner must have two years of annual income of $18,000 or more
- Cosigner may not exceed 45% debt-to-income ratio
Benefits and features
- No origination or repayment fees
- 0.30% interest rate reduction after 24 monthly payments for borrowers who qualified at highest interest rate
- Borrowers who meet credit requirements may apply for cosigner release after 24 monthly payments
- Three repayment options while in school — defer payments until graduation, make interest-only payments, or repay principal and interest
- Deferment and forbearance options for those who qualify
International Association of Jewish Free Loans
Offering: Member organizations of the International Association of Jewish Free Loans (IAJFL) offer assistance through a number of interest-free loan programs, including student loans.
Terms: Determined by member organization
Eligibility:
- Some, but not all, loan programs available only to members of the Jewish faith
- Member organizations often require cosigner or cosigners
- Borrowers typically must live in area served by member organization
Benefits and features
- Loans are interest-free
Massachusetts Educational Financing Authority (MEFA)
Offering:
MEFA loans for undergraduates and graduates
Minimum loan amount: $2,000 for private school, $1,500 for public school
Maximum loan amount: Cost of attendance (tuition, fees, room, board, books, and miscellaneous expenses) minus financial aid.
Terms: 10 or 15 years
Eligibility:
- Enrolled at least half-time in an accredited degree-granting undergraduate program at an eligible nonprofit college or university
- Resident of or attending college in Massachusetts (or co-borrower reside in Massachusetts)
- Maintain satisfactory academic progress as defined by the college or university
- At least one borrower must meet MEFA’s current credit approval standards
Benefits and features:
- No penalty for early repayment
- Undergraduate loans offer three repayment options (immediate, interest-only, and deferred), borrowers who meet underwriting standards can apply for coborrower release after 48 consecutive on-time monthly payments
- Graduate loans offer two repayment options (interest-only and deferred)
Minnesota Office of Higher Education / SELF Loan
Offering: SELF Loan for undergraduates and grad students
Maximum loan amount: $20,000 annual limit for 4-year undergraduate and grad school loans, $100,000 lifetime limit on undergraduate and $140,000 lifetime limit on grad school loans.
Terms: 10, 15 or 20 years.
Eligibility:
- Minnesota resident attending any participating U.S. college, or U.S. citizen attending participating college in Minnesota
Benefits and features
- No penalty for early payment
- Must pay interest every three months while attending school
- Two repayment options: standard (monthly payment of principal and interest starting 13 months after leaving school) and extended (continue making interest-only payments for two additional years)
- No grace periods or deferment options
- No cosigner release or switching cosigners
PAVE
Offering: PAVE personal loans
Minimum loan amount: $3,000
Maximum loan amount: $25,000
Terms: 2 or 3 years
Eligibility:
- Must be a U.S. citizen
- You must be at least 18 years of age
- Having U.S. bank account
- Credit score of 660 or higher
- Must have income, job offer, or be planning on attending a course
Benefits and features
- No restrictions on how to spend loan
- Not available in Arizona, Connecticut, District of Columbia, Maine, Massachusetts, Nebraska, New Jersey, Nevada, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Vermont, West Virginia, Wisconsin and Wyoming.
PNC
Offering: PNC Solution Loan for undergraduates, grad school students, medical school, residency, and bar exam preparation.
Maximum loan amount: $40,000 annual loan maximum, $225,000 maximum aggregate (including federal and private student loans).
Terms: 15 years
Eligibility:
- Borrower or cosigner must have two years of credit history, two years of continuous income or employment history
- An undergraduate student in a degree program
- Enrolled at least half-time as determined by your school
- U.S. citizen or permanent resident
Benefits and features
- No application or origination fees
- 0.50 percentage point rate discount for autopay
- Borrowers who provide proof of income and pass a credit check can apply for cosigner release after 48 consecutive monthly payments
- Payments can be deferred while in school, or begin repayment immediately to save on interest
- For those deferring payments, repayment begins six months after you graduate
- One-time capitalization of interest at repayment
Regions Bank / Sallie Mae Smart Option Student Loan
Offering: Sallie Mae Smart Option Student Loan for undergraduates and grad school students
Minimum loan amount: $1,000
Maximum loan amount: Up to 100 percent of school-certified cost of attendance (minus other aid)
Terms: 10 years
Eligibility:
- Must attend a participating degree-granting school or have attended one in an eligible prior enrollment period
- Borrower or cosigner must be a U.S. citizen or a permanent resident
- Non-U.S. citizen attending participating U.S. school are eligible with a creditworthy cosigner who is a U.S. citizen or permanent resident.
Benefits and features
- No origination fees
- 0.25 percentage point interest rate reduction for auto pay
- Borrowers who meet credit requirements can apply for cosigner release after 12 consecutive monthly payments
- Choice of deferred repayment, fixed repayment, or interest-only repayment while in school
- No prepayment penalty, regardless of the repayment plan
RISLA
Offering: RISLA Student Loan, RISLA Parent Loan
Minimum loan amount: $1,500
Maximum loan amount: $40,000
Terms: 10, 15 years
Eligibility:
- Student must be Rhode Island resident or attend college in Rhode Island
- Student may be full-time, half-time or less than half-time
- Borrower or cosigner must meet $40,000 minimum income requirement for loan
Benefits and features
- 0.25 percentage point interest rate reduction for auto pay
- $2,000 in loan forgiveness for completing internship
- No origination, disbursement or guarantee fees
- No prepayment penalty
- Income-based repayment program for qualifying borrowers
- Creditworthy borrowers can apply for cosigner release after 24 consecutive payments
Sallie Mae
Offering: Sallie Mae Smart Option Student Loan for undergraduates and grad school students
Minimum loan amount: $1,000
Maximum loan amount: Up to 100 percent of school-certified cost of attendance (minus other aid)
Terms: 10 years
Eligibility:
- Must attend a participating degree-granting school or have attended one in an eligible prior enrollment period
- Borrower or cosigner must be a U.S. citizen or a permanent resident. Non-U.S. citizen attending participating
- U.S. school are eligible with a creditworthy cosigner who is a U.S. citizen or permanent resident.
Benefits and features
- No origination fees
- 0.25 percentage point interest rate reduction for autopay
- Borrowers who meet credit requirements can apply for cosigner release after 12 consecutive monthly payments
- Choice of deferred repayment, fixed repayment, or interest-only repayment while in school
- No prepayment penalty, regardless of the repayment plan
South Carolina Student Loan
Offering: Palmetto Assistance Loan for undergraduate students and graduate students
Minimum loan amount: $2,000
Maximum loan amount: $100,000 for borrowers and cosigners, including previous PAL loans.
Terms: 10 years for loans less than $17,500; 15 years for loans of $17,500 or more.
Eligibility:
- Enrolled at least half-time basis in a certificate or degree granting program at an eligible school
- Attending a public or not-for profit college or university (exception: Charleston School of Law)
- Residents of Massachusetts, Oklahoma and West Virginia not eligible.
- Maintain satisfactory academic progress as defined by the institution
- Be U.S. citizen, national or permanent resident of the U.S.
Benefits and features
- No application fees
- No origination fees
- 0.25 percentage point interest rate reduction for autopay
SunTrust
Offering: Custom Choice Loan for undergraduate and graduate students
Minimum loan amount: $1,001
Maximum loan amount: $65,000 annual limit (up to school’s cost of attendance minus other financial aid such as federal student loans, scholarships or grants); $150,000 lifetime limit includes all student loans and certain unsecured consumer debt.
Terms: 7, 10 or 15 years
Eligibility:
- Be enrolled at least half-time or more at an eligible school
- U.S. citizen or permanent resident. Residents of Iowa and Wisconsin are not eligible
Benefits and features
- “Graduation reward” 1% principal reduction
- Up to 0.50 percentage point interest rate reduction for autopay
- No application, origination or prepayment fees
- Interest-only, partial interest, and full deferment repayment plans with six-month grace period available
- Borrowers who meet credit and income standards may apply for cosigner release after 48 months of on-time payments
Union Federal (loans funded by SunTrust Bank)
Offering: Union Federal Private Student Loans funded by Sun TrustBank — details are same as SunTrust Custom Choice Loan, except borrowers who meet credit and income standards may apply for cosigner release after 36 monthly payments.
Vermont Student Assistance Corp.
Offering: Vermont Advantage Student Loan, Vermont Advantage Parent Loan
Minimum loan amount: $200
Maximum loan amount: Up to school’s cost of attendance minus other financial aid.
Terms: 10 years for loans up to $9,999; 15 years for loans of $10,000 or more
Eligibility:
- Undergraduate or graduate student enrolled at least half time at an eligible postsecondary school
- Vermont resident attending college in or out of state, or
- Out-of-state resident attending college in Vermont
- U.S. citizen or eligible non-citizen
Benefits and features
- Credit-approved cosigner required
- Origination fee may apply, depends on cosigner’s credit: 5% origination fee for cosigner with good credit, 3% for cosigner with better credit, 0% fee for cosigner with excellent credit
- Borrowers meeting credit requirements may apply for cosigner release after 48 monthly payments
- Up to 36 months of hardship forbearance available at VSAC’s discretion
Wells Fargo
Offering: Wells Fargo Collegiate student loans for undergraduates, Wells Fargo Graduate Loan for MBA, law, or other graduate programs
Maximum loan amount: $120,000 lifetime limit including all other education-related debt, $180,000 for law and business graduate degrees.
Terms: 15 years
Eligibility:
- Enrolled at an eligible school seeking a degree, certificate, or license
- U.S. citizen, U.S. national, permanent resident alien without conditions, or international students who are temporary resident aliens with current U.S. address and evidence of eligibility
- For permanent and temporary resident aliens, a U.S. citizen must cosign the loan
- Those enrolled less than half time can still qualify.
Benefits and features
- 0.25% interest rate reduction for borrowers with previous Wells Fargo student loan or another qualifying account
- 0.25% autopay discount
- Payments not due until six months after leaving school
- No application, origination, or early repayment fees
- Borrowers who meet credit and income requirements may apply for cosigner release after 24 consecutive monthly payments if the first payment was made on time, or after 48 months if the first payment was not made on time.
Your Private Student Loan Search Ends Here
Is a private student loan right for you?
If federal aid, scholarships and family contributions won’t cover all your costs, private loans could help some borrowers fill the gaps.
The interest rate on private student loans depends on the borrower or cosigner’s credit risk, and whether they’d rather have a fixed-rate or variable-rate loan. Pick a variable-rate private student loan, and you’ll start out with a better interest rate than you’d get on a fixed-rate private loan with the same repayment term.
Most private lenders will also offer fixed-rate private loans. With a fixed-rate loan, you’ll pass up the chance to start out making lower monthly payments but if interest rates go up, your monthly payments will remain unchanged.
Many private lenders now also offer features like grace periods and optional deferment. Just keep in mind that even if you defer your loans or opt to use your grace period, the interest on your loans will continue to accrue.
When shopping around for private loans, you should consider factors like fees, interest rates, and terms. You should also take into account the number and amount of monthly payments because they will affect the total cost of your loan.
Interest rates on student loans
Federal student loan interest rates:
The interest rate on your loan will depend on the type of loan that you have and when the funds were disbursed. Once you take out a federal loan, the interest rate is fixed for life — to get a lower rate, you can refinance with a private lender.
Interest rates for new federal loans are adjusted annually, using a formula that’s based on yields on 10-year Treasury notes. Your interest rate may also depend on your field of study, profession or lend provider. Graduate students tend to have a higher interest rate.
Here you can find the average student loan interest rates on various types of federal loans here.
Private student loan interest rates:
Rates on private student loans vary from lender to lender. Federal loans for undergraduates generally have lower interest rates compared to private loans. However, private lenders offer variable interest rate loans.
Unlike fixed-rate loans, variable rates will fluctuate may fluctuate during the life of the loan. Some private lenders will also offer fixed-rate loans, but it’s typically good advice to take advantage of all the scholarships, grants and other aid available to you before turning to private loans.
What are the different types of loans?
Perkins Loans:
The federal government offers the Perkins Loan for students with exceptional financial need. The loan guarantees low interest rates for both undergraduate and graduate students. Interest isn’t charged on Perkins loans while you’re in school at least half-time, and there’s a grace period of nine months after you leave school before you’re required to start paying them off.
According to the Federal Perkins Loan Program Extension Act of 2015, students at participating schools who can demonstrate need will be able to receive Perkins loans through Sept. 30, 2017 — but only if they’ve taken out all of the Federal Direct Loans that they’re eligible for. After that, schools will no longer be able to issue Perkins loans.
Direct Subsidized Loans:
The primary advantage of a direct subsidized loan is that the Department of Education will pay the interest on your subsidized loan:
- While you’re in school at least half-time.
- During the grace period of your loan (the first six months after you leave school, when you do not have to begin repayment immediately).
- If you apply for and are granted a deferment (a postponement of repayment).
The idea is that recent grads can take advantage of the grace period to find a job and set themselves up to be financially stable before having to begin paying off their loans. Unfortunately, subsidized loans are only available to undergraduate students.
Direct Unsubsidized Loans:
Unlike subsidized loans, unsubsidized student loans begin accruing interest from the very first day your loan is disbursed. You won’t be responsible for paying that interest until you graduate school, but the accrued interest is added to your principal loan amount.
You are not required to demonstrate financial need when applying for a federal unsubsidized loan, and are allowed to borrow a higher amount than you’re allowed with a subsidized loan. Both undergraduate and graduate students are eligible to apply for a federal unsubsidized loan.
Direct PLUS Loans:
Students who need to cover additional expenses can consider PLUS loans. PLUS loans are unsubsidized and are available for both parents of undergraduate students and graduate students.
Borrowers can borrow as much in PLUS loans as they need to cover their educational costs, but will pay a hefty interest. Interest on PLUS loans issued from July 1, 2016 through June 30, 2017 will be 6.31 percent. Additionally, PLUS loans carry a 4.3 percent up-front disbursement fee.
Further Reading:
- How to Apply for Student Loans
- Key Differences Between Federal and Private Student Loans
- How to Get a Subsidized Loan
- Guide to Taking Out Student Loans
Credible is a multi-lender marketplace that allows borrowers to get personalized rates and find the best private student loans from vetted lenders, without affecting credit score.
