Best Private Student Loans [2024] Avoid Common Mistakes

Do you need to borrow money to pay for school? You’re hardly alone. In fact, the average student at a public university borrows over $25,000 to complete their bachelor’s degree. 

As you navigate the student loan process, your first step should be to apply for federal loans. They’re easier to get, and the terms are often more favorable.

But if you need additional help, consider private student loans. 

Below, I’ll review some of the best private student loans available. I’ll also tell you which mistakes to avoid. 

That way, you can get the best possible terms on your private student loan!

Best Private Student Loans

There are a few factors to consider when choosing between private student loans:

• Interest rates. This determines how much you’ll pay for the right to borrow. And make sure you know the difference between fixed rates (which stay the same) and variable rates (which can change as you’re repaying the loan). 

• Available loan amounts. Know how much money you’ll need – and then look for a lender willing to provide it.

• Available term lengths. Decide if you can save money by paying off the loan faster or if you’ll need more time to repay the loan. Then, look for a loan that matches your needs.

• Minimum credit score. Creditworthiness is a big factor in qualifying for the best private student loans. That’s why you might want to consider using a cosigner.

• Eligibility requirements. With some lenders, you need to be at least a half-time student. There are also requirements related to your status as a U.S. resident.

Now that you know what to look for, you’re ready to read about the best private student loans available today!

1 – Sallie Mae®

Smart Option Student Loan®

Best For: Full-time, half-time, or less than half-time

Fixed APR:  3.49% – 15.49%¹ (for undergraduate students) – rates shown include the auto debit discount

Variable APR: 5.04% – 15.21%¹ (for undergraduate students) – rates shown include the auto debit discount

Loan Amounts: $1,000 – up to 100% of the school-certified expenses.²

Available Term Lengths: 10-15 years³

Minimum Credit Score Required: Mid 600s

Eligibility Requirements:

• Attending a participating school full-time, half-time, or less than half-time
• Taking just a few classes or summer classes, seeking a professional certification, or enrolled in a continuing education or technical/trade program
• U.S. citizens or U.S. permanent residents
• Non-U.S. citizen borrowers residing in and attending school in the U.S. and applying with a creditworthy U.S. citizen or U.S. permanent resident cosigner
• U.S. citizens and U.S. permanent residents enrolled in eligible study abroad programs or who are attending participating schools located outside the U.S.

Sallie Mae is a private company that offers some of the best private student loans. 

Sallie Mae is a a great option for half-time or less than half-time students who might not qualify with other lenders. 

Applying for a Smart Option Student Loan® with a cosigner may help your chances of approval and may also help you receive a lower rate.

Pros

• Loans can cover all of your education costs, including laptops, books, and even travel expenses.  
• Full-time, half-time, and less than half-time are eligible.
• The Smart Option Student Loan® is available to undergraduate and career training students, and there are also loans for graduate and post graduate students.

Cons

• Sallie Mae doesn’t refinance student loans.
• There’s no prequalification process to check your potential terms prior to applying.

2 – Ascent

Best For: High-achieving students who don’t have a cosigner

Fixed APR: 4.48% – 15.38%

Variable APR: 5.94% – 15.83%

Loan Amounts: $2,001 – $400,000

Available Term Lengths: 5 – 20 years

Minimum Credit Score Required: None

Eligibility Requirements: Must be enrolled full-time or half-time; must be a U.S. citizen, permanent resident, or have DACA status; cosigners must be U.S. citizens or permanent residents

Ascent offers three different types of student loans:

1. Cosigned credit-based loans
2. Non-cosigned credit-based loans
3. Non-cosigned “outcomes-based” loans – available to full-time juniors and seniors with a GPA of 3.00 or higher. 

It’s the outcomes-based loans that make Ascent so unique. Are you an upperclassman with no cosigner but decent grades? Then these are probably the best private student loans available to you. 

So congratulations! Your hard work in school is already paying off.

Pros

• Juniors and seniors qualify for “outcomes-based” loans with a 3.00 GPA and above.
• Using the automatic repayment option will give you an interest rate decrease of 1.00% (for outcomes-based loans) or 0.25% (for credit-based loans).
• You can request forbearance or deferment.

Cons

• Outcomes-based loans aren’t available to international students.
• International students must have a U.S. citizen or permanent resident cosigner.
• Students must be enrolled at least half-time. 

3 – College Ave

Best For: Students whose cosigner has good or excellent credit

Fixed APR: 4.42% – 15.99%

Variable APR: 5.29% – 15.99%

Loan Amounts: $1,000 – The full cost of your education (minus financial aid)

Available Term Lengths: 5-20 years

Minimum Credit Score Required: 650

Eligibility Requirements: Must be a U.S. citizen, a U.S. resident, or have a U.S. social security number; must be enrolled at an accredited institution

With a 4.6-star rating on Trustpilot, College Ave is definitely one of the most popular lenders offering student loans. 

Applying for a College Ave student loan online takes only 3 minutes, and you’ll get a decision immediately. How’s that for incredible service? It’s no wonder College Ave has a reputation for offering some of the best private student loans. 

Pros

• You’ll get an immediate decision after applying online. 
• Flexible loan terms – allowing you to save money by getting a 5-year loan.
• Excellent customer reviews.

Cons

• Forbearance is only granted in increments of 3 – 6 months.
• You get a maximum of 12 months of forbearance total.
• Cosigners must have a credit score in the mid-600s or higher. 

4 – Earnest

Best For: Applying with a cosigner

Fixed APR: 5.32% – 16.20%

Variable APR: 4.43% – 15.90%

Loan Amounts: $1,000 – $138,500 per year

Available Term Lengths: 5-15 years

Minimum Credit Score Required: 650

Eligibility Requirements: Must be a U.S. citizen or have non-conditional, 10-year permanent residency; undergraduates must be enrolled at least half-time; must be pursuing a degree at a Title IV-qualified non-profit 4-year institution

Flexibility and convenience – that’s what places Earnest on this list of the best private student loans. You can check your eligibility in just 2 minutes. And then, there are four repayment options, meaning you can find the terms that fit your financial profile. 

And while Earnest doesn’t require a cosigner, you should definitely get one if you can. That’s because having a cosigner makes it five times more likely that your application will be accepted. 

Pros

• You won’t have to make payments during a 9-month grace period that starts after you get out of school.
• Using autopay is super convenient – and it gives you a 0.25% interest rate reduction.
• Your chances of getting improved are five times greater with a cosigner.

Cons

• Cosigners must earn at least $35,000 per year.
• Cosigners must have 3+ years of good credit history.
• Loans are unavailable in Nevada.

5 – Credible

Best For: Assessing multiple options

Fixed APR: 5.13% – 16.45%

Variable APR: 4.42% – 15.99%

Loan Amounts: Varies by lender

Available Term Lengths: 5 – 20 years

Minimum Credit Score Required: 670

Eligibility Requirements: Must be a U.S. citizen or permanent resident; must be enrolled in a qualifying institution

Credible is an online tool that helps you choose between the best private student loans available.

Start by taking Credible’s 3-minute questionnaire. From there, you’ll see a list of potential loans that you’re likely to qualify for. This is an awesome strategy because it really lets you weigh your options. 

Pros

• You can use the platform to compare multiple lenders.
• Checking which loans you qualify for won’t affect your credit score.
• Credible guarantees the best possible rate – and will give you $200 if you go on to find a better rate somewhere else. 

Cons

• Not all student loan providers are represented on the network.
• You can’t access loan options without creating an account.

Mistakes When Choosing a Student Loan

The student loan process might be complicated, but you can avoid some of the most costly mistakes if you know about them ahead of time.

So here are five of the biggest mistakes to avoid when you’re choosing a student loan:

• Not calculating exactly how much you’ll have to pay each month. You’ll have to base life decisions on this number, so make sure you know what it is!

• Choosing the wrong repayment term. If the repayment term is too short, you might not be able to afford your payments. If it’s too long, you’ll pay more in interest.

• Not checking interest rates. If you’re not used to borrowing money, all those decimal points, percentage signs, and acronyms can seem overwhelming. But remember, the interest rate is what determines the total cost of your loan!

• Blindly choosing a variable-rate loan. The variable rate might start out as the cheapest option, but it could increase in the future. That doesn’t mean a variable-rate loan is never a good idea – but make sure you go into it understanding the risk.

• Borrowing more money than you need. Repaying a loan is hard. Don’t make it even harder by borrowing too much!

Best Private Student Loan Reddit

On Reddit, someone recently started a thread asking about the best private student loans.

In the responses, a few people stressed the importance of shopping around. One person also mentioned that the loan terms will depend on two factors: your credit score and your cosigners. 

Another Redditor pointed out the importance of maximizing your federal loan options before looking for a private loan. This is fantastic advice because even the best private student loans usually have higher interest rates than federal student loans.

Commonly Asked Questions About The Best Private Student Loans

Best Banks for Student Loans?

Here are some of the best banks and private lenders for student loans:

• Sallie Mae
• Ascent
• College Ave
• Earnest

You could also search for private loans on Credible, which is an online tool that draws on a network of private lenders. 

Best Student Loans?

The best student loans are the federal loans you get by filling out a FAFSA form. They generally have lower interest rates, and they’re needs-based – meaning your credit history won’t affect your chances of approval. If you can’t access federal loans, you could use a private lender like Sallie Mae or Ascent. 

Is Sallie Mae a Good Private Lender?

Sallie Mae is a reputable lender with decades of experience. The interest rates are competitive, and even part-time students can get a loan. A federal loan would still be better, but if you need a private student loan, Sallie Mae is a solid choice. 

Is It Hard to Qualify for Private Student Loans?

Qualifying for a private student loan can be tough, especially if you don’t have a cosigner. Many students don’t have the income or credit history to qualify. That’s why a cosigner is often the key. With the lender Earnest, for example, having a cosigner makes approval five times more likely! 

Is It Better to Take a Student Loan From a Private Bank? 

It’s usually better to take out a federal loan if you can get one. Federal loans have lower interest rates – plus, they offer deferment options and sometimes even loan forgiveness. With higher interest rates and tougher requirements, loans from private banks are more of a “Plan B.” 

Are Private School Loans Worth It?

Private student loans can absolutely be worth it, especially if you’ve exhausted other options like scholarships, grants, and federal student loans. Just make sure you look carefully at the interest rates and loan terms. You don’t want to overburden yourself with debt.

Private Student Loans That Go Directly to You?

With most of the best private student loans, the money is sent to the school, not to you as the student. That’s how it works with these popular private lenders:

• Sallie Mae
• Ascent
• College Ave
• Earnest

Sallie Mae Disclosures:

Borrow responsibly
We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.
Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.
1 Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.
2 For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
3 Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE.
Information advertised valid as of 10/25/2024.
Sallie Mae loans are made by Sallie Mae Bank.
The Money Manual is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.
Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their representative owners.