Use our guide to research the best student loan company for you. We explain what to look for when taking out federal loans, private loans or both. There are many differences between lenders, including rates and terms, so it is essential to research companies before applying. Compare our top picks for private lenders by loan types, APRs and reviews.
Our picks for top private student loans
You can apply for private student loans from online lenders, banks and other financial institutions. We based our top picks on overall satisfaction rating and availability and provided a breakdown of each company by loan types, rates and repayment options. Compare available programs to find the right option for you.
- Our top pick overall: PNC Student Loans
- Our pick for student loan marketplace: Credible
- Our pick for loan discounts: SoFi
- Our pick for private servicer: Navient
- Our pick for career training loans: Sallie Mae
- Loan types: Undergraduate, graduate and professional
- Fixed rates: Starting at 3.69% APR
- Variable rates: Starting at 1.96% APR
PNC's private student loans are an option for students who plan to start repayment while still enrolled in their school’s degree program.
The company offers immediate and interest-only payment plans, and it gives a 0.5% interest rate reduction for automatic payments and co-signer release options. Another plus is there are no application or origination fees.
A reviewer in Illinois said PNC has “excellent follow up and concern for refinancing opportunities.”
- Loan types: Vary
- Fixed rates: Vary
- Variable rates: Vary
Credible is not a direct lender — it's a marketplace for borrowers to compare student loan and student loan refinancing options. It's a free service that charges no application fees or origination fees for student loans.
With more than 100 lenders to choose from, borrowers can compare options for both federal and private student loans. Pre-qualification is quick; all you need is personal information and information about the school you're attending to get started.
“Most loan companies have large interest rates but this has reasonable interest rates,” according to a reviewer in Illinois.
- Loan types: Undergraduate, graduate, law, MBA and parent loans
- Fixed rates: Starting at 2.99% APR
- Variable rates: Starting at 0.99% APR
Compare Offerson Personal Loan ProSoFi's highlights include an easy online application, flexible repayment terms and special rate discounts. Funding can cover up to 100% of the school-certified costs. The maximum you can borrow is $100,000.
You can get an interest rate reduction when you sign up for automated payments, and there are no origination or application fees.
The company also offers student loan refinancing options. “I transferred my student loan to Sofi, because I was able to get a better interest rate and pay it down quicker. The process was easy, the online management is great, and approval was very quick,” a reviewer in California said.
- Loan types: Interest-only, extended term, deferment and more
- Fixed rates: Vary
- Variable rates: Vary
- Loan types: Undergraduate, graduate, career training and parent loans
- Fixed rates: Starting at 3.50%
- Variable rates: Starting at 1.13%
Sallie Mae is one of the largest providers of private student loans in the U.S. This lender offers loans for medical school and undergraduate, graduate and MBA programs.
Funding is available for non-U.S. citizens to help students pay for online learning. The company might be an easier option for borrowers who've struggled to qualify for student loans in other places.
“Going through my online degree would be far fetched if I didn't have the option of Sallie Mae,” a reviewer in Nairobi said. According to a reviewer in New Jersey, Sallie Mae’s “offers were great” and “repayment was easy.”
What is a student loan?
Student loans are loans for educational expenses, and lenders give them with the expectation that the borrower will pay them back. They don't differ much from other types of loans, but there are some attributes associated with student loans in particular. Their interest rates may be lower than other loan types, and repayment often starts when the borrower leaves school.
In the U.S., 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.
Banks, credit unions and other organizations offer private student loans. They tend to be more expensive than federal student loans, with variable or fixed interest rates.
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 consideration
- 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
- Provides flexibility for students and parents
How do student loans work?
When you take out a student loan, you're committing to paying back the money once you put your degree to work after graduation.
Some private lenders require payments while you're still in school. Private student loans require credit checks and accept co-signers.
Federal student loan interest rates are 3.73% to 6.28% on loans disbursed from July 1, 2021, to July 1, 2022.
With federal student loans, payments aren’t due until the student graduates, leaves school or changes enrollment status. Credit checks aren't always required, and there are several repayment plan options.
You should borrow what you need for the whole school year once per year. You can apply for a student loan in the middle of the semester, but only if you haven’t already gone over your borrowing limit.
Getting a student loan without a co-signer: 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.
Getting a student loan with a co-signer: Your spouse, relative, guardian or friend can be a co-signer on your loan, but only one person can co-sign for a private student loan. For instance, if two parents are willing to be co-signers, only one can do it. Your co-signer is responsible for repaying the full amount of the loan if you default.
Student loan pros and cons
Student loans provide access to higher education to those who cannot afford tuition, but they are also a significant responsibility. About 43 million students and graduates have student loan debt, and that number continues to grow with the high cost of postsecondary education.
Pros
- Receive a higher education
- Potential for 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
Benefits of a student loan
For many students, taking out a student loan is the only way higher education becomes attainable. Getting a good education is often a catalyst for a successful and stable career.
Paying back a student loan on time after college can also be a good way to build your credit.
Student loans might make it possible for you to move out of your parents' house. Another benefit is student loan refinancing, which makes it easier to consolidate debt after graduation.
If you use the money to pay for a degree in one of the highest-paying college majors, it might be easier to pay off your loans. Still, it can be hard to get a job after college, no matter what you studied.
Disadvantages of a student loan
Taking out a student loan means starting postgraduate life with debt. Student loan debt can get in the way of other financial and lifestyle goals, such as buying a house, purchasing a car or taking a vacation. Penalties for defaulting on student loan repayments can also cost more in the form of fees, interest or, in extreme cases, wage garnishment.
Interest and origination fees are what make education debts so costly, and defaulting on a loan or being late on a payment can add to the total amount you owe.
When you’re borrowing for college, it's essential to determine what your average student loan payment will be after graduation. If you have at least an estimate, you'll have an idea of what to consider when putting salary expectations on paper during a job interview.