Private Student Loans - Best Lenders, Interest Rates and Repayment Options

A quick and simple introduction to private student loans followed up by some of the important lenders like Salie Mae, College Ave, Citizen One and a few others that provide loans with the best interest rates, terms, and repayment options.

Updated by Sharan Kumar on 6th July 2020

A private student loan is a good way to cover costs for students. It is a non-federal or a private education student loan used to cover education-related expenditures. It may be advised to take these loans, once individuals have already exhausted other forms of free and federal financial aid. These loans are typically based on good credit history and verified proof of income or employment history.

The loans are given based on credit and are usually easier to get if applied with a co-signer as most students don't have a good credit score. They have better loan limits when compared to standard federal loans hence they are the go-to option after exhausting all other federal loans, grants, and scholarships.

Table of contents

Top 10 Private Student Loan Lenders

Here is a list of lenders where one can find the best private student loans -

(The values of these factors may change on a yearly basis)

Position Lender
1 Sallie Mae
2 College Ave
3 Citizens Bank
4 Ascent
5 Common Bond
6 Sun Trust
7 Lendkey
8 Discover
9 Earnest
10 Laurel Road

For Sallie Mae, you would require a co-signer for 12 months, for Citizens Bank - 36 months, for Ascent - 24 months, SunTrust - 36 months, and LendKey -12. 

Lender Interest (Fixed or Variable)
Loan Term (Years)
Sallie Mae Fixed : 4.74% - 11.85%, Variable : 1.50% - 9.66% 5,15
College Ave Fixed : 3.99 - 12.99%, Variable : 1.24- 11.98% 5,8,10,15
Citizens Bank Fixed : 5.25 - 12.09%, Variable : 4.47 - 12.34% 5,10,15,20
Ascent Fixed : 3.62% - 14.50%, Variable :  2.73% - 13.01% 5,10,15
Common Bond Fixed : 3.67 - 7.25%, Variable : 2.7 - 7.44% 5,7,10,15
Sun Trust Fixed : 5.35 - 14.05%, Variable : 4.38 - 13.38% 7,10,15
Lendkey Fixed : 3.49 - 8.93%, Variable : 2.70 - 8.96% 5,7,10,15,20
Discover Fixed : 5.99 - 13.99%, Variable : 4.49 - 13.49% 15,20
Earnest Fixed : 3.89%, Variable : 2.53% 5,20
Laurel Road Fixed : 3.50 - 7.02%, Variable : 3.23 - 6.65% 5,7,10,15,20

View the college ave disclosure

View the Sallie mae disclosures

Difference between a Federal and a Private student loan

Federal and private student loans differ in many ways such as the interest rates, lenders, the approval basis, the co-signer requirement and much more. We shall discuss a few in the following lines - 

Factors Federal student loans Private student loans
Lenders Federal Government Private banks, Credit Unions and others
Interest rates Fixed Fixed and Variable
Repayments options Not until you graduate While attending a school or sometimes after graduation
Approvals based on FAFSA and expected family contribution Credit scores, income, debt, school, the field of study and other factors
Co-signer requirements Not required Mostly expected

Factors of differentiation between Federal and Private loans

Given below is a list of factors with the help of which we can better understand the difference between federal and private student loans.

1) Lender

Federal loans are lent out by the Federal government.

Private loans are lent out by Private banks, Credit unions, and other financial institutions. 

2) Interest rates

Federal loans usually have a fixed rate of interest.

Private loans have both fixed and variable rates of interest.

3) Repayment options

Federal Loans do not require repayment until after you graduate.

Private loans may be required to be paid while you attend a school or not until after graduation.

4) Approval

Federal loans are approved based on FAFSA and expected family contribution (EFC).

Private student loans are approved based on credit scores, income, debt, school, occasionally field of study and other associated factors.

5) Co-signer requirements

Federal loans do not require a co-signer.

Private loans or most of them expect you to have a co-signer. A co-signer can be your friend, family member or spouse. 

Best private student loan lenders

Here is a list of 12 private student loan lenders with their features. 

1. Sallie Mae

Sallie Mae offers private student loan options for undergraduate, graduate students, and parents.

It has a shorter co-signer release term. There is a 0.25% interest rate reduction available with automatic payments.

  • No application, origination, disbursement or prepayment fees are required.

  • Borrow up to 100% of the school's certified cost of attendance.

  • Free FICO credit score reports are available.

Fixed APR - 4.74% to 11.85%

Variable APR - 1.50% to 9.66%

Loan Terms - 5 to 15 years

Repayment while in school - Interest-only, fixed monthly payments, or full deferment until graduation.

Co-signer release - Yes, after 12 on-time monthly payments.

Official Website - Link

Read more on Sallie Mae student loans

2. College Avenue

College Ave is one of the student loan lenders that offer student loan options for undergraduates, graduate students, and parents, and offer student loan refinancing.

They have a short and easy application form.

  • Undergrad, graduate and Parent loans are available

  • There is a 0.25% interest rate reduction for auto-debit plans while in school

  • No application, origination fee or prepayment fees are required

  • Minimum loan amount of $1,000 and a maximum loan amount equal to the cost of attendance certified by the school of attendance.

Fixed APR - 3.99% - 12.99%

Variable APR - 1.24% to 11.98%

Loan terms - 5, 8, 10, or 15 years

Repayment while in school - Full payments, interest-only, fixed monthly, full deferment until graduation

Co-signer release - N/A.

Official Website - Link

Read more on College Avenue student loans 

3. Citizens Bank

Citizens One is the student loan division of the well-established Citizens Bank. It offers undergraduate & graduate student loans, plus refinancing of already existing student loans.

It has great customer service. They have the availability of undergraduate, graduate, and Parent loans.

  • Up to 0.5% reduction in interest rates for making automatic payments and having a citizen's bank account.

  • No application, origination or prepayment fees.

  • Minimum loan to refinance - $10,000

  • Up to $90,000 for undergraduate student loans and up to $295,000 for graduate student loans.

  • Refinancing and consolidation of federal and private student loans with an Education Refinance Loan from Citizens Bank.

  • Fixed-rate student loan refinancing featuring an interest rate as low as 3.90% to 9.99% APR with automatic repayments for eligible candidates.

  • Variable interest rates range from 3.00% - 9.74% APR with automatic repayments and will fluctuate over the term of your loan with changes in the LIBOR rate.

  • Loyalty discount - 0.25 percent point interest rate reduction on a new Education Refinance Loan if you or your co-signer (if applicable) has a qualifying account in existence in our system at the time of application.

  • Automatic payment discount - 0.25 percent interest rate reduction by authorizing our loan servicer to automatically deduct your payments each month from any bank account of yours.

  • Co-signer release - Co-signer may be released from loan responsibility right after making 36 consecutive, on-time principal and interest payments.

  • No application, origination or disbursement fees

Fixed APR - 5.25% - 12.09%

Variable APR - 4.47% - 12.34%

Loan terms - 5, 10, 15, 20-year repayment term plans

Repayment while in school - Full payments, interest-only, full deferment until graduation.

Official Website - Link

Read more on Citizens Bank

4. Ascent

Ascent student loans is one of the only private student loan lenders who offer a Non-Cosigned Future Income Based Loan option for students who do not have a cosigner or lack sufficient credit history.

They offer Undergraduate and Graduate student loans.

  • 1% Cash Back Reward upon graduation.

  • 0.25% to 2.00% discount automatic repayments

  • No application, origination or prepayment fees

  • Loans amounts between $1,000 and $200,000

Fixed APR - 3.62% - 14.50%

Variable APR - 2.73% - 13.01%

Loan terms - 5, 10, or 15 years

Repayment while in school - Interest-only, fixed monthly payments, or full deferment until graduation

Co-signer release - Yes, after 24 on-time monthly payments.

Official Website - Link

Read more on Ascent student loans

5. CommonBond

CommonBond offers student loan options for undergraduates and graduates. Refinancing and consolidation of private and federal student loans is also done here.

The refinancing options are available for undergraduate, graduate, and Parent PLUS student loans.

  • 0.25% interest rate reduction with the use of automatic payments through the ACH

  • Unemployment protection loan payments are paused and it helps able graduates find new jobs and also hire them for short-term consulting projects

  • Access to CommonBond Community Borrowers comes with perks such as access to events in their cities, networking opportunities, and lifestyle perks

  • Social good for every fully funded degree through CommonBond's loan program, it also funds the education of a student in need abroad for a year through Pencils of Promise Division.

  • No application, origination or disbursement charges.

Fixed APR - 3.67% – 7.25% APR refinancing with automatic repayments.

Variable APR - 2.70% – 7.44% APR refinancing with automatic repayments.

Mixed APR - 4.35% – 6.30% APR hybrid rate refinancing with automatic repayments.

Loan term - 5, 7, 10, 15, 20 year repayment terms.

Official Website - Link

Learn more about CommonBond student loans

6. SunTrust

SunTrust offers private student loan options for undergraduate and graduate student loan borrowers with good credit or a co-signer with good credit and stands out for a wide variety of repayment choices.

  • 2% principal reduction after graduation.
  • Undergrad, Grad and Grad Business loans available.

  • No application, origination or prepayment fees.

  • Loans amounts range from a low amount of $1,001 to $65,000 per year (aggregate max of $150,000)

Fixed APR - 5.35% - 14.05%

Variable APR - 4.38% - 13.38%

Loan terms - 7, 10, or 15 years

Repayments while in school - Full payments, interest-only, fixed monthly, full deferment

Co-signer release - Yes, after 36 on-time monthly payments.

Official Website - Link

Learn more about SunTrust student loans

7. LendKey

There are greater chances of loan approval with LendKey’s network of not-for-profit lenders.

You get to check real refinancing rates in 2 minutes with one form with no impact on your credit score.

There are no handoffs – You will be with their fully trained customer service team from the point of your application to the point of your final payment.

  • Refinancing and consolidation of private and federal student loans are possible.

  • Available for both undergrad and graduate school student loans.

  • 0.25% interest rate reduction is made available to all borrowers while making automatic payments.

  • Unemployment protection – The longest period of 18 months available of paused loan payments while in-between jobs.

  • Minimum balance to avail refinance - $5,000

  • Minimum income requirement of $24,000/year

  • No application or origination fees, and no prepayment fees

  • Keep payments low with interest-only repayment available for the initial four years of some 15year term loans for payment during school terms.

Fixed APR - 3.49% to 8.93% APR with automatic payment options

Variable APR - 2.70% to 8.96% APR with automatic payments options

Loan term - 5, 7, 10, 15, 20-year repayment plans

Cosigner release - Yes, available after 12 on-time payments.

Official Website - Link

Read more on LendKey student loans

8. Discover

Discover offers student loans and student loan refinancing for undergraduates and graduate students. Discover’s flexible payment options for borrowers experiencing financial hardship are exceptional and worth making a note of.

They offer undergraduate, graduate, and professional student loans.

  • 0.25% interest rate reduction while enrolled in automatic payments.

  • No application, origination or prepayment fees.

  • Cover up to 100% of your school-certified college expenditure.

Fixed APR - 5.99% - 13.99%

Variable APR - 4.49% - 13.49%

Loan terms - 15 or 20 years

Repayment while in school  - Interest-only, fixed monthly payments, or full deferment until graduation.

Co-signer release - No.

Official Website - Link

Read more on Discover student loans

9. Earnest

Earnest is a good bank that is known to have great customer service and value its relationship with them very high.

Refinancing is available for undergraduate or graduate student loans from both private and federal lenders.

There are no specific income requirements as Earnest looks at thousands of data points to evaluate financial responsibility and then arrives at the lowest possible rate.

  • Commitment-free 2 minute rate checkups

  • Earnest will never pass you off to a third party. Their on-site team is your customer service partner for the entire life of your loan

  • No origination fees, application fees, or prepayment fees

  • Must have completed undergraduate or graduate degree or expected graduation within 6 months of application

  • Must be currently employed or with an employment offer starting within 6 months of application

  • Must be a U.S. citizen or permanent resident

Fixed APR - 3.89% APR fixed for automatic repayment plans

Variable APR - The rates start at 2.55% APR variable for an automatic repayment plan.

Loan term - Wide flexibility to pick any monthly payment and term between 5 and 20 years – saving you more than standard rates and terms comparatively.

Ability to change your loan as your life and needs change – refinance your loan for free, change payment dates, can even skip a payment once a year and make it up later. Unemployment protection to stop your monthly payments when in-between jobs.

Official Website - Link

Read more on Earnest student loans

10. Laurel Road

The refinancing and consolidation of private and federal student loans are done here, all under one roof. You must have completed an undergraduate or graduate degree program that qualifies.

It also allows parents of Bachelor's degree students the opportunity to refinance student loans they took out to help finance their children's education as long as their child has graduated and is currently working.

Parents can refinance their Parent PLUS loans in their own name or their child's name.

  • No origination fee or prepayment fees

  • 0.25% Interest rate reduction with automatic payments via ACH

  • Max variable rates capped at 9% for 5-10 year terms.

  • For greater than 10 year term, the max rate cap is 10% APR

Fixed APR - 3.50% – 7.02% with automatic repayments in fixed rates

Variable APR - 3.23% – 6.65% with automatic repayments on variable rates

Loan term - 5, 7, 10, 15, 20, year repayment terms.

Official Website - Link

Learn more on Laurel Road loan refinancing 

11. SoFi

SoFi offers to refinance and also consolidate your private and federal student loans.

A student must have completed an eligible undergraduate or graduate degree program.

It is available for both undergraduate and graduate students.

  • No origination fees or prepayment penalties.

  • Unemployment protection – Loan payments are paused and they help find a new job.

  • Career support – Complimentary coaching for SoFi members.

  • Entrepreneur program – Qualified applicants can avail loan deferrals and mentorship.

Fixed APR - 3.90% APR to 8.02% APR (with autopay) fixed rates.

Variable APR - 2.56% to 7.30% APR  variable rates, capped at 8.95% / 9.95% APR depending on term of loan.

Loan term - 5, 7, 10, 15, 20, year repayment plans.

Official Website - Link

Learn more on SoFi student loans

12. PNC Bank

A 0.50% interest rate reduction on automatic payments for the duration while you attend school.

Loans available for Undergraduate, Graduate, Health Professionals, Residency, and Bar Study.

  • No application, origination or prepayment fees.

  • Borrow up to $40,000 for undergrads and up to $65,000 for grads per year.

Fixed APR - 5.58% - 11.79% APR

Variable APR - 4.94% - 10.10% APR

Loan terms - Up to 15 years

Repayment while in school - Full payments, interest-only, or full deferment

Co-signer release - Yes, after 48 on-time monthly payments.

Official Website - Link

Learn more about PNC Student Loans

Other private student loans to explore

Apart from the private student loans mentioned above, you can also explore other private lenders who offer loans if you don't qualify for the above lenders. 


Lender Name

Fixed interest rates


Prodigy Finance

6.12 % -8.13 % 

4.62% - 7.62%






6.074% -15.075%

Wells Fargo

5.24% to 9.99%

4.74% to 9.99%


3.48% - 7.35%

2.88% - 7.25%


3.865% - 7.675%

5.570% - 9.420% 



2.50% - 7.50%


3.266%- 4.606%


Bank of North DaKota


3.93%-   4.74%



4.510% - 7.180%






2.99% - 6.24% 





4.95% to 6.85%

3.28% to 6.18% 


2.72% – 8.38%


Great lakes

3.2% - 6.43%

2.39% - 6.43%

Education loan finance


3.50% -4.25% 



4.09% -6.06%

Prodigy Finance

Prodigy Finance is a fintech platform especially known for its loans offering to international graduate students and refinancing to international graduates working in the United States or planning to do their studies in the postgraduate institution. The best part of it as they provide private loan to international students in the U.S without co-signers. Prodigy Finance, online lenders refinance the international student loan without asking for credit history or co-signer, thus if you are an international student looking for a student loan you can have a look. This loan is available in 150 countries all over the world and on 285 eligible universities.


Purefy is an online lender and known for exclusively offering PenFed student loan refinancing for its members. PenFed is well known because of these come under a few lenders who provide married couples to refinance together. Purefy was later was part of the Bank of Virginia issuing loans under the name of CordiaGrad but got separated in 2016 and now an exclusive online lender for PenFed student loan offering. One big benefit of the PenFed is it releases the co-signer after 12 months on-time payment which makes it a good option for those borrowers who can’t refinance on their own.


Raise a private student lender to help students in financing their educational cost and consider one of the trustworthy lenders among all. Raise provide loans such as Custom Choice Loan, Graduate Business Loan, Union Federal Private Student Loan, and Kinecta as well as help in bearing other extra costs like a textbook, computers, housing, etc thus if you are looking for the student loan you can have look on Raise private student loan lender.

Wells Fargo

Wells Fargo student loan makes the cost affordable for the student who is looking for loans as they offer offers various interest-rate discounts to its banking customers plus they release the co-signer soon which means if you are looking for refinance then you should have look on Wells Fargo as well. They provide an offer to their banking customer as well which make it more trustworthy and convenient to the borrowers. Not only they focus students for a loan they also provide loans to their parents as well with minimum fees charging(especially late fees).


Navient is one of the well known private student loan lenders in the U.S, provides an online platform as well for the borrowers to make payments, check their activity and balances, and access account resources, if you are using an online platform you can check in their office as well. if you are having the federal student loan and Navient is your loan servicer then you will be automatically enrolled in the standard repayment plan however you have other options as well based on your loan type. So check the option which best goes with your current financial budget.


INvested are an Indiana company which help student and their families in reducing the loan debt and access a reasonable private loan solution when it’s not possible. With there offering the graduation becomes affordable to the students as you can get flexibility in payments.INvested you get an opportunity of deferment even when you are in school.INvestEd loans are just one type of private student loan, but the company offers a ton of college cost planning solutions for free thus every borrower should check the lenders’ features and choose accordingly.


iHelp all funds are sponsored by its parent company Reunion Student Loan Finance Corp.and offers student loan refinancing if you attended schools in four states: Maryland, Pennsylvania, West Virginia, and Virginia.iHelp offers graduated and income-sensitive repayment plans which are unique under among the student loan refinance loans. For the refinance you need a good credit history and also provide Personalized rate estimates without affecting the credit score thus if you are thinking for the iHelp as an option then analyze all its feature before applying.


Thrivent is one of the best credit unions in the U.S and last year they enter the student loan refinance. They provide services on the online platform as well as helping the borrowers to fill the form in a single sitting, as in this borrowers have to fill an application form to see the rates. The best part of the Thrivent loan is they didn’t affect credit score and loan term is for 15 years. They are one of the best credit unions running and have a good management team thus if a borrower is looking for student loans they can have a look at the Thrivent and explore the different opportunities provided by them.

Bank of North Dakota

Bank of North Dakota is a state-run financial institution and offers both private student loans and student loan refinancing to those who qualify. It is partnered with the local institutions to better serve the state’s residents on a local level. They offer DEAL One loan and Consolidation loan under the refinancing, which helps both residents and non-resident to refinance federal and private student loans from one or more lenders into one loan at a low-interest rate. Before applying to check the requirements of loan and explore all the options and choose appropriately.


EDvestinU is a private student loan lender established by the New Hampshire Higher Education Assistance Foundation. They provide private student loans, refinancing, consolidation. If you have a good credit score and was unable to get a loan from other lenders, you can check the details and benefits that EDvestinU has to offer you. Find the link to get more details about EdvestinU


This bank was established in the year 1911 to provide several loans like Mortgage Loans, Loans for farm Farm Management, personal and student loans. They provide good options for both graduate and undergraduate students.
Details information is provided indicating its benefits. This link helps you decide to choose for the right loans. 


If you are left with fewer options because of bad credit or no credit at all. You can reach our finance. They also provide multiple alternatives to student loans. Do be aware of the interest rates they do provide. For more details for loan types, interest, etc check the WeFinance student loan finance.


Brazos student loans are basically loan providers in Texas. Providing refinance and Parent loans at affordable rates to the borrowers. They customize the loans according to your financial status. And ideally has good reviews. For more information regarding their services take a look at their website and also for loan details check Brazos loans.


MEFA is a Massachusetts Educational Financing Authority providing student loan that offers multiple repayment options for borrowers to manage their finances. Like other lenders, they also provide Undergraduate and graduate student loans. For more information regarding Mefa, take a look at their website and MEFA loans.


Mpower was found by international students for helping with loans for international students and residents. Most of their interactions will be online. Their private loans are best for international students seeking to study abroad. For more details check Mpower.

Great lakes

Great lakes services both federal and private student loans. The type of loan you choose may change after you start making payments for loans. It can be changed only by refinancing, for more information on their loan types and services, check Great lakes.

Education loan finance

These loans are basically offered by SouthEast. They have good reviews from their customers providing student loan refinancing, undergraduate, and graduate student loans. They have apps supporting them to provide good service. For more details on this lender please check Education loan finance.


U-Fi provides flexible payments, with lower interest rates compared to their competitors, and also helps borrowers giving them flexible repayment options. They also provide good customer service, hence any issues you can always reach their customer support, for more information on U-fi check their website and U-Fi.

How to get a Private student loan?

Requirements for applying to the best private student loans can be pretty easy. Most private student loan lenders these days prefer that you apply online. Many are offering mobile-friendly applications for easy access for you on the go.

Typically, after choosing a lender, you will be asked to first fill out some basic personal and educational information. If you are electing to use a co-signer, they may have to provide some information about themselves as well.

In general, you will need to have at least an average credit score of close to 700 (on a scale of 300 to 850). Otherwise, you will likely need a co-signer to qualify for a private student loan.

If you are meeting the initial requirements, you will next most likely be required to upload documents so as to allow the student loan lender to determine your eligibility and interest rates.

Within a few days or sometimes within a few hours, the lender will inform you if you are eligible and, if so, what interest rates and repayment terms you can choose from for your loan.

The last step is to sign the Master Promissory Note. This is a legally binding contract that requires you to pay back the student loan, over time, with interest.

After signing this note, your student loan funds will be sent to your school for disbursement to you.

In order to search for the best private student loan lenders by finding the 10 largest.  Each lender receives a grade for its options or performance in these 8 categories:

  • Interest rates: Various private lenders offer variable and fixed-rate student loans. Most of the lenders advertise an annual percentage rate, although with either type of loan the rate you receive can depend on your creditworthiness, co-signer, and current market rates. Each lender is graded with rates either its low or high-end rate for both variable and fixed-rate loans. Lenders got a grade based on how their rates compared with the average rates of all 10 companies, with the highest grade going to those offering below-average rates. 
  • Interest rate reduction with autopay: All the 10 largest private lenders allow your interest rate by signing up for autopay. The discount rate can range from 0.25% to 0.50% to the borrowers who are signing for autopay and most points are also awarded to the lenders with the highest discounts.
  • Fees: Some or like most of the private and federal student loans have origination and disbursement fees, a certain percentage of your loan amount that you have to pay when taking out the loan. But all those 10 largest private lenders charge no such fees.
  • Online application: The application process with each of the lenders and assigned grades based on the clarity of the website and simplicity of the application process.
  • Maximum repayment term: all the top lenders got top marks for offering a 15-year loan term option. A longer-term can result in lower monthly payments, and also increase your overall cost of borrowing. Some of the lenders do offer shorter term, which can increase the monthly payment but also lower the interest rate. 
  • Cosigner release ability: Some lenders let you release a co-signer if you meet their credit and income requirements and make a consecutive series of on-time full interest and principal payments. The lenders that had the shortest time-period requirement (12 months) got the highest score, while lenders that didn’t allow for co-signer release got the lowest. 
  • Maximum deferment: All  Private student lenders offer different types of repayment plans, such as full interest and principal payment, interest-only payments, $25-per-month payments and an option to fully defer your payments until after you graduate.
  • Extra credit that set the lender apart from the pack: They give bonus points to lenders that offered borrowers extra benefits, such as a principal reduction upon graduation.

What should a good private loan offer?

  • No application, origination, prepayment or late fees.

  • Provide highly competitive interest rates.

  • Supplement and help with other financial aids to meet the total cost of your education.

  • Help pay for your undergrad, grad school and professional degrees as well as career training.

  • Cover any education-related expenses including books, computers and more. 

  • Also, aid in building your credit, especially with a credit-worthy co-signer.

  • Make a cosigner release available

  • Provide a variety of repayment plans.

How do I choose a private student loan?

Compare the offers from various lenders including banks, credit unions, and online lenders to find the lowest interest rate. Depending on the lender, you may be given the choice to choose a fixed or a variable interest rate.

A fixed-rate stays the same all through the life of a loan. A variable-rate may start out lower than a fixed rate but could go up or down over time depending on economic conditions.

Consider any borrower protections your private lender give you, including deferment and forbearance, as well as repayment options.

You may also have the option to choose your loan term, which implies you could pay off your loan faster and with less interest by making more payments over shorter periods of time or make fewer payments with more interest over a longer period of time.

Still worried about college tuition? Learn about student loans 

What is co-signing a private student loan?

A co-signer is a person who signs a loan agreement in addition to the primary borrower. He/She agrees to continue paying the loan if the borrower cannot do so or ceases to do so, regardless of the reason. They must have a higher credit score than the borrower to ensure they have a positive impact on the application.

Some lenders do offer co-signer release programs after a certain number of on-time payments are made usually mentioned in terms of the number of consecutive timely monthly payments made.

Benefits of using a co-signer

  • The loan becomes more likely to be approved

  • The borrower receives a lower interest rate

  • You have someone to motivate you to stay on top of loans

  • The cosigner may be discharged later through refinancing the loan

Risks of using a co-signer

  • The credit of primary borrower and co-signer will both be affected if payments happen to miss deadlines.

  • Co-signer's retirement could be delayed until released.

  • They will be required to make payments if the primary borrower does not make them.

Will I need a co-signer for a private student loan?

If you have no income and either bad or no credit, you’ll need a co-signer to get a private student loan. Without bills in your names, such as a credit card, car loan or utility, you have no way to show 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 above the 650. Signing with a co-signer means they’re responsible for your loan bill if you can’t pay.

Some lenders offer loans exclusively for student borrowers that don’t have credit to take into consideration. Instead, these lenders look at the school you’re attending and your income and career potential to deduce whether the amount you can borrow can be paid back and at what rate.

How does repayment work?

Most private student loan borrowers are given a choice of a few repayment options. Popular options include -

  • Full payments - Make full monthly payments while still in school. It saves the most money by paying off interest.

  • Partial payments - Make a flat payment or fixed payment each month to help reduce the total cost of your loan. This does not save as much money as making full payments but saves more than full deferment where interest builds up.

  • Interest-only payments - Pay only the accrued interest each month to keep the buildup fixed. When you graduate, your loan balance will be equal to what you originally took out and the principal amount to be paid will be added to your payments along with the interest already being paid.

  • Full deferment - You do not make any payments while in school. Interest will continue to accumulate the entire time which makes this the most expensive option.


While most students will require loans to cover the cost of college, there are some negatives to consider - 

  • Generally higher interest rates when compared to federal loans

  • Fewer repayment options in comparison to federal loans

  • Cannot be discharged in bankruptcy which is important to note

  • Credit will be damaged if payments are missed which can further hamper any future loan requests.

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Frequently Asked Questions

  • 1.How do I qualify for a private student loan?

    Each lender will have its own eligibility criteria for taking out a loan. With most loans, credit score and income are taken into consideration. Higher scores and incomes tend to avail the best student loan 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 be present with a co-signer. Some lenders who have loans for applicants without a co-signer will consider career and income potential. Lenders will often require you to be attending a Title IV school, which means your school processes federal student aid. Some lenders don’t offer loans in certain parts of the country.

  • 2.How quickly can I get a private student loan?

    If the money is sent directly to the college, it usually takes 1-2 weeks before the remaining money is refunded to you. Therefore, from the date the loan is approved, it usually can take 3-10 weeks for you to receive the student loan money from a private student loan.

  • 3.How long does it take for a private student loan to be approved?

    After loan approval, it can take 2 weeks to 2 months for the lender to send the loan amount to the college or to you, whichever is applicable. If the money is sent directly to the college, it typically takes 1-2 weeks before the remaining money is sent to you.

  • 4.Do private student loans go directly to the school?

    Most financial aid including scholarships, grants, work-study paychecks, and loans will usually go directly to the school, where it's applied to your tuition payments, college fees, on-campus housing payments, and more. That being said, some scholarship or loan options will allow the funds to go directly to you, the student.

  • 5.Can I get a private student loan with bad credit?

    If you definitely need a student loan, but you have bad credit or no credit history, federal student loans are your best bet. A private loan from one of the few lenders that do not have credit checks or co-signer requirements, although you'll pay comparatively higher interest rates. Another way of getting a private student loan with bad credit is to apply with a co-signer who has good credit.