When the cost of college seems too high, a student loan can help. There are two types of student loans available: federal and private. The former is funded by the government, and the latter is funded by a bank, credit union or another lender. While there are unique benefits and drawbacks to each type of loan, both can be useful tools to help you fund your education.
When you’re searching for the best private student loan provider for your degree, there are several factors to consider, including rates, limits and repayment terms.
You can apply for private student loans from online lenders, banks and other financial institutions. We compared 19 popular student loan companies on features, including loan types, rates and repayment options. We also considered overall ConsumerAffairs satisfaction ratings and availability before making our top picks.
Note that our picks may be Authorized Partners who compensate us. This does not affect our recommendations or evaluations but may affect the order in which the companies appear.
Student loans are education loans that must be repaid with interest either immediately or after the set grace period. There are two types of student loans: federal and private.
Federal student loans are funded by the federal government, and they have fixed rates that are often lower than private loans. Federal loans can also come with more flexible repayment options if the borrower cannot repay them.
Private student loans come with a fixed or variable rate and are typically backed by banks, credit unions or other lenders.
Federal vs. private student loans
Most students obtain a federal student loan first and then seek private loans if they need additional funding. Both types come with different options, terms and conditions. It's important to know the differences between these two kinds of student loans:
Federal student loans
Income-driven repayment plans for some borrowers
No credit check required for most loan types
Repayment plans and terms can be changed
Private student loans
Offer a choice of fixed or variable interest rates
Interest-only and fixed repayment plan options for when you’re in school
To start your student loan process, submit a Free Application for Federal Student Aid (FAFSA) form, even if you don’t think you will qualify for aid. The information provided can be sent to one or many schools. Based on your FAFSA results, the college you select will send you a financial aid offer letter containing the amount you're awarded and other pertinent information. This will allow you to access federal student loans and special school-specific aid.
If there are still gaps in tuition coverage, private student loans can help. You can apply for private student loans directly on a lender's website. You should apply after you've made your school decision and once you know how much you need to borrow.
Depending on the repayment option offered by the lender, you will have to start full or partial repayment right away or six months after graduation. Waiting to start repayment until after graduation is the costliest option since the interest still accrues even if you don’t have a monthly bill yet.
Do I need a co-signer for my student loan?
Not all lenders require co-signers, but if you are a student with limited or poor credit history, it is easier to get a private student loan with one. However, to get a student loan without a co-signer, consider federal student loans first — most of these don’t require one. If you need additional financing, some private lenders offer loans without co-signers.
If you do need a co-signer, they must be an eligible applicant who meets the lender’s income and credit criteria. Only one co-signer is allowed, so choose the applicant that is more creditworthy to get the best rates. Your co-signer is responsible for repaying the full amount of the loan if you default.
Student loans pros and cons
While student loans are a common financial tool to afford higher education costs, they should be considered carefully before you apply. Financial aid that you don’t have to repay, such as scholarships, grants and work-study programs, should be considered alongside private student loans. Here are the top pros and cons of taking out student loan debt:
Pros
Receive a higher education
Potential for a successful career
High borrowing limits
Paying it off builds credit
Cons
Debt (even if you don’t graduate)
Penalties for defaulting
Interest can be burdensome
Co-signer may be required
FAQ
Who is eligible for student loans?
Undergraduate, graduate and professional school students who are U.S. citizens or eligible noncitizens and have financial needs are usually eligible for student loans. Parents can also take out student loans for their children.
How much do student loans cost?
Student loan costs include the loan amount, origination fees and interest that you pay back over time. For example, if you borrow $10,000 with a 4.5% interest rate and a 15-year term, you'll pay back around $75 toward the loan each month. After 15 years, you’ll have paid back around $13,800.
Origination fees vary by lender. Federal student loans have fees based on a percentage of the total loan amount.
Is student loan interest tax deductible?
Borrowers can take a tax deduction on student loan interest paid. The maximum tax deduction you can take is $2,500 a year.
Can you get a student loan with bad credit?
Having a limited or bad credit history does not disqualify you from getting a federal student loan. However, private student loan providers do have specific income and credit requirements. If you don’t have a good credit score, consider finding a co-signer to guarantee your loan with a private lender.
What is the maximum amount of student loans you can get?
Private student loan limits are set by the lender, but many will cover 100% of tuition costs.
For federal student loans, the limit depends on your year and dependent status. For example, first-year undergraduate loans are available up to $5,500 for dependent students (up to $3,500 can be in subsidized loans). Graduate students can borrow up to $20,500 each year.
Disclaimer
Information in this guide is general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. ConsumerAffairs.com makes no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use.
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Provides loans for undergraduates, graduates and parents. Career training and trade school loans available. Undergraduate rates start at 3.47%, including a discount for automatic payments. Refinances up to $300,000.
Funds loans for full- and part-time students. Approves 95% of applicants who have a co-signer. Multiple repayment options available. Variable rates 5.04% to 15.21% APR; fixed rates 3.49% to 15.49% APR. No origination fees.
Offers private and co-signed student loans plus refinancing. Has programs for MBA, medical and law school funding. Not available for international students or associate degree seekers. Requires a credit score of 650 or above.
Select from a variety of student loan options. Available for international students. Variable rates 2.99% to 13.99% APR; fixed rates 5.49% to 14.99%. No fees. Cash rewards available for good grades.
Offers undergraduate, graduate, MBA, dental and medical student loans. Refinancing loans are also available. Undergraduate rates start at 3.74% APR. Automatic payment discount. Five-, 10- and 15-year loan options available.
Private lender for undergraduate and graduate students. Refinancing is also available. Offers variable and fixed interest rates. APR varies by applicant creditworthiness.
Helps find personalized rates from multiple lenders in minutes. Over 100 lending partners. Free to search and view loan and refinancing options. Inquiries don’t impact credit score. Allows co-signers.
Find grants and student loans for undergraduate and graduate students, international students, military families and work-study students. Lets borrowers restructure their payment plans for free.
Online marketplace for secured and unsecured loans. Free to compare rates and quotes from lenders for mortgages, car loans, personal loans and more. Minimum credit score requirements vary. Available nationwide.
Mostly services private student loans as of 2022. Borrowers can manage loans on its website and access educational tools and articles. Offers military benefits and discounts for autopay setup.
Works with over 13,000 local banks and credit unions to provide private student loans and refinancing. Charges interest rates starting at 1.49% for variable-rate loans and 3.99% for fixed-rate loans. No origination fees.
Specializes in personal and business banking. Offers mobile and online services for checking and savings accounts. Home loans, student loans and refinancing, auto loans, investing and retirement services available.
Offers private student loans, with co-signers allowed. Credit- and income-based loans available. DACA and international students are eligible. Find boot camp loans for accelerated learning programs.
Marketplace for current and prospective students on financial options. Works with third-party lenders to offer loans for students. Doesn’t underwrite any of the loans on the site.
Offers a range of student loan types and terms. No late fees or prepayment penalties. Autopay discount. Principal reduction of 2% upon graduation. Doesn’t approve funding for all schools.
Browse refinancing and scholarship options at no charge. Compares private student loan lenders side by side. Offers tips, advice, interactive tools and deals for students in higher learning.
Offers co-signer release upon request after 36 consecutive monthly payments are made on time. Pre-qualify in minutes without impacting credit scores. Customizable repayment options.
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
