Student loans 13 February 2023

16 Best Private Student Loans of this Year

Private student loans are a great way to cover the cost of your college education but finding the right one may be challenging. This blog suggest the current best private student loans that you can consider.

Best Private Student Loans

Federal loans are loans disbursed by the government whereas private student loans are handled by private institutions like banks, credit unions, and online lenders.

When getting a student loan, federal loans are the best place to start as they come with various long-term benefits and a lower interest rate. However, federal loans might not be enough to cover your educational expenses and you might need to apply for private ones to fill the gap.  Some people also fail to qualify for federal aid through FAFSA and only have the option to apply for private loans.

We’ve compiled a list of the best private student loans along with the relevant details on each so you can make an informed decision when selecting one that is right for you.

The 16 Best Private Student Loans Right Now

LenderScholaroo ratingFixed rates starting (APR)Variable rates starting (APR)

SoFi

Best Private Lender

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5/54.49%5.09%

Sallie Mae

Best for Loan Availability

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4.9/54.50%5.37%

College Ave

Best for Low-Interest Rates

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4.9/54.49%4.49%

Funding U

Best For No Cosigner Loan

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4.8/57.49%N/A

Ascent

The Best Repayment Terms

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4.8/54.62%5.74%

Citizens Bank

One of the Most Established Lenders

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4.8/54.43%5.57%

Earnest

Great for Fair Credit

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4.8/54.47%4.14%

Custom Choice

Best for Discount in Principal After Graduation

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4.7/54.43%5.13%

Discover

Best for Undergraduate Students

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4.6/55.49%4.74%

RISLA

Best for Student Nurses

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4.6/54.45%N/A

ISL Education Lending

Multiple Private Loan Options

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4.5/53.85%6.10%

MPOWER

Best for International Students

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4.5/512.99%N/A

Edly

Best for Career Training Loans

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4.4/59.40%N/A

Education Loan Finance

Great Customer Relations

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4.4/53.20%1.20%

LendKey

Best for Customer Service

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4/54.89%4.89%

A.M. Money

Good for Merit Based Loans

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4/57.95%N/A
Lender

SoFi

Best Private Lender

Scholaroo rating
5/5
Fixed rates starting (APR)
4.49%
Variable rates starting (APR)
5.09%
Visit website
Lender

Sallie Mae

Best for Loan Availability

Scholaroo rating
4.9/5
Fixed rates starting (APR)
4.50%
Variable rates starting (APR)
5.37%
Visit website
Lender

College Ave

Best for Low-Interest Rates

Scholaroo rating
4.9/5
Fixed rates starting (APR)
4.49%
Variable rates starting (APR)
4.49%
Visit website
Lender

Funding U

Best For No Cosigner Loan

Scholaroo rating
4.8/5
Fixed rates starting (APR)
7.49%
Variable rates starting (APR)
N/A
Visit website
Lender

Ascent

The Best Repayment Terms

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.62%
Variable rates starting (APR)
5.74%
Visit website
Lender

Citizens Bank

One of the Most Established Lenders

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.43%
Variable rates starting (APR)
5.57%
Visit website
Lender

Earnest

Great for Fair Credit

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.47%
Variable rates starting (APR)
4.14%
Visit website
Lender

Custom Choice

Best for Discount in Principal After Graduation

Scholaroo rating
4.7/5
Fixed rates starting (APR)
4.43%
Variable rates starting (APR)
5.13%
Visit website
Lender

Discover

Best for Undergraduate Students

Scholaroo rating
4.6/5
Fixed rates starting (APR)
5.49%
Variable rates starting (APR)
4.74%
Visit website
Lender

RISLA

Best for Student Nurses

Scholaroo rating
4.6/5
Fixed rates starting (APR)
4.45%
Variable rates starting (APR)
N/A
Visit website
Lender

ISL Education Lending

Multiple Private Loan Options

Scholaroo rating
4.5/5
Fixed rates starting (APR)
3.85%
Variable rates starting (APR)
6.10%
Visit website
Lender

MPOWER

Best for International Students

Scholaroo rating
4.5/5
Fixed rates starting (APR)
12.99%
Variable rates starting (APR)
N/A
Visit website
Lender

Edly

Best for Career Training Loans

Scholaroo rating
4.4/5
Fixed rates starting (APR)
9.40%
Variable rates starting (APR)
N/A
Visit website
Lender

Education Loan Finance

Great Customer Relations

Scholaroo rating
4.4/5
Fixed rates starting (APR)
3.20%
Variable rates starting (APR)
1.20%
Visit website
Lender

LendKey

Best for Customer Service

Scholaroo rating
4/5
Fixed rates starting (APR)
4.89%
Variable rates starting (APR)
4.89%
Visit website
Lender

A.M. Money

Good for Merit Based Loans

Scholaroo rating
4/5
Fixed rates starting (APR)
7.95%
Variable rates starting (APR)
N/A
Visit website

#1 SoFi

Best Private Lender

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SoFi

5
Scholaroo Rating
Fixed Rates Starting (APR)4.49%
Variable Rates Starting (APR)5.09%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Launched in 2019, SoFi Private Student Loans helps students pay for tuition and offers competitive rates. SoFi aims to help students and their guardians access financial literacy and support. They offer transparency in their loan application, disbursement, and repayment. The loan is available for both full- and part-time graduate or undergraduate students enrolled at an accredited school.

Pros

  • No late or insufficient funds fee
  • No loan origination or application fee
  • Has many flexible repayment options

Cons

  • The process may be slow and takes up to six weeks
  • Be a U.S. citizen, U.S. permanent resident, or a non-permanent resident alien
  • Borrowers need to be employed
  • Be a resident of the United States and the District of Columbia
  • The age someone legally becomes an adult in your residence state
  • Six months grace period
  • 0.25% interest reduction for automated payments
  • Personalized monthly student loan payment

#2 Sallie Mae

Best for Loan Availability

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Sallie Mae

4.9
Scholaroo Rating
Fixed Rates Starting (APR)4.50%
Variable Rates Starting (APR)5.37%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Sallie Mae bank offers the Sallie Mae private student loans to undergraduates, graduates, and parents. Sallie Mae is one of the largest private student loan lending institutions in the U.S. The bank provides up to 100% of the loan amount requested by the borrower to cover all educational expenses.

Pros

  • Can cover all education expenses
  • No loan origination, application, or repayment fee
  • May or may not need a cosigner

Cons

  • Has a minimum credit score
  • Be enrolled at least halftime in a degree program
  • International students need a cosigner who is a U.S citizen or resident
  • Be a U.S citizen or a resident attending an eligible school
  • 10–15 year loan term
  • Has three repayment programs (deferred, fixed, and interest only repayments)
  • Cosigner is released after one year of consecutive timely payments

#3 College Ave

Best for Low-Interest Rates

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College Ave

4.9
Scholaroo Rating
Fixed Rates Starting (APR)4.49%
Variable Rates Starting (APR)4.49%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

College Avenue is a private student loan that fits most borrowers’ goals and budgets. They are one of the best private student loan lenders with a low-interest rate. They have four different loan options and these include undergraduate student loans, graduate student loans, parent loans, and refinancing. Their user-friendly website helps borrowers calculate their payment terms based on the information they submit.

Pros

  • Covers 100% of school costs
  • No loan origination fee for graduate and parent loans
  • Easy to apply
  • Flexible repayment options

Cons

  • Can have a long loan approval process
  • Meet set satisfactory academic progress
  • Be enrolled in an accredited school in the U.S.
  • Be at least 16 years of age
  • 0.25 interest rate reduction on recurring payment
  • Borrowers can pay either while in school or after graduation
  • Average loan repayment term is 5–20 years

#4 Funding U

Best For No Cosigner Loan

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Funding U

4.8
Scholaroo Rating
Fixed Rates Starting (APR)7.49%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Funding U provides no cosigner student loans ranging between $3,000 to $20,000 per year to undergraduate students with fixed interest rates. They are a great lender choice for students with no or poor credit and who find it hard to get a cosigner. Funding U loan approval is based on the student’s academic achievement, course load, likelihood to graduate on time, and projected future earnings.

Pros

  • No cosigner student loan
  • No application, origination, or cancellation fees
  • No pre-payment penalties
  • Lends to all class years
  • Loans based primarily on academic achievements and career path
  • Every pre-approved student receives a dedicated loan officer

Cons

  • Only limited to undergraduates
  • $20,000 maximum loan amount per year
  • Some states are not eligible
  • Not available to international students
  • Part-time students are not eligible
  • Must be a U.S. citizen, permanent resident, or DACA recipient
  • Must be over the age of 18
  • Must be a full-time undergraduate student at an eligible at Title IV-eligible four-year college in the US
  • Must not be enrolled in for-profit schools
  • 10-year repayment terms
  • Six months grace period
  • In-school partial payments and In-school interest only payment options

#5 Ascent

The Best Repayment Terms

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Ascent

4.8
Scholaroo Rating
Fixed Rates Starting (APR)4.62%
Variable Rates Starting (APR)5.74%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Ascent provides access to education for millions of students every year. Ascent gives more opportunities to qualify for a loan both for undergraduate and graduate programs. Named as the best private student loan in 2021 by “Forbes”, Ascent has changed how students pay for education at higher learning institutions through loans. They have empowered students from different backgrounds and various disciplines.

Pros

  • Has the best repayment terms
  • Easy application process
  • Uses alternative factors to determine eligibility
  • No minimum income requirement

Cons

  • Has a minimum credit score
  • Be a junior or senior
  • Be a U.S citizen or a permanent resident
  • At least 18 years of age
  • 1% cash back reward upon showing proof of graduation
  • Five to 20 year repayment terms
  • Start payment from up to 9 months after graduation

#6 Citizens Bank

One of the Most Established Lenders

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Citizens Bank

4.8
Scholaroo Rating
Fixed Rates Starting (APR)4.43%
Variable Rates Starting (APR)5.57%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Citizens Bank is a popular private student loan lender with 1,100 nationwide. It is one of the nation’s oldest and largest financial institutions offering many financial products and services besides student loans. Along with providing loans to undergraduates and graduates, it also provides parent loans, refinancing loans, personal loans, business loans, and scholarships. The bank allows students to borrow a maximum of $150,000 in loans, or the total cost of education, whichever is lower.

Pros

  • Trusted lender with more than 40 years of experience
  • Higher rate discounts combining up to 0.50% loyalty and autopay discount
  • Can borrow up to the cost of attendance
  • Lower starting fixed rates
  • No origin, application, disbursement, prepayment fee
  • Multi-year approval option is available
  • Prequalification available

Cons

  • Two-year schools, community colleges, and for-profit schools are ineligible
  • Requires a reasonably strong credit history with a good credit score
  • Cosigner required for poor credit
  • Must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer
  • Must be at the age of majority or above, or have a cosigner who is
  • Must be enrolled at least half-time in a degree-granting program at an eligible institution.
  • Must meet minimum credit requirement or have a cosigner that does
  • Immediate, deferred, interest-only repayment options
  • 6 months grace period
  • 5 to 20 years repayment terms

#7 Earnest

Great for Fair Credit

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Earnest

4.8
Scholaroo Rating
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Earnest differs from other private student loan lenders as it also looks into other aspects other than credit scores. They consider salary, debt-to-income ratio, and employment history for each borrower.

Earnest offers fair and customized rates to borrowers based on the information provided. Their rate calculator helps borrowers understand how much they can borrow, interest rates, and refinancing information.

Pros

  • No late payment fees
  • No loan application or origination fee
  • Has a rate match feature

Cons

  • Requires a credit score of 650 and above
  • Resident of the U.S. (excluding Nevada and Kentucky states) and District of Columbia
  • Age of majority in the state of residence
  • U.S. Citizen or Permanent Resident
  • Choose individual monthly payment amount
  • 9 months grace period
  • Loan term range from five to 15 years

#8 Custom Choice

Best for Discount in Principal After Graduation

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Custom Choice

4.7
Scholaroo Rating
Fixed Rates Starting (APR)4.43%
Variable Rates Starting (APR)5.13%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Custom Choice offers lower interest rates to its student compared to most of its competitors and allow students to borrow up to 100% of their cost of attendance. What makes this lender unique is the 2% principal reduction it offers with proof of graduation.

Pros

  • 2% reduction in principal amount with proof of graduation
  • Prequalification available
  • Flexible repayment options
  • Covers 100% of the school-certified cost of attendance, and education-related living expenses
  • Cosigner release available
  • High yearly maximum loan limit of $99,999, and lifetime borrowing limit of $180,000
  • No extra fees

Cons

  • Higher starting variable interest rates
  • Not available to permanent residents of Arizona, Iowa or Wisconsin.
  • Must be a U.S. citizen, permanent resident alien, or Eligible Non-Citizen (DACA resident) applying with an eligible U.S. citizen/resident cosigner
  • Must be enrolled at an eligible institution in a degree-granting program
  • Must be the legal age of majority at the time of application, otherwise requires a cosigner
  • 6,10, and 15 years repayment terms
  • 4 repayment options: deferred, flat, interest-only, immediate payment
  • 6 months grace period for deferred payments

#9 Discover

Best for Undergraduate Students

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Discover

4.6
Scholaroo Rating
Fixed Rates Starting (APR)5.49%
Variable Rates Starting (APR)4.74%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Discover Bank offers private student loans that help to cover tuition, housing, books, and other costs of attendance. Discover Bank student loans offer refinancing options for students who want or may need more to complete their studies. The financier offers different student loan types and aggregate loan limits apply for each.

Pros

  • Up to 100% coverage of school-certified college costs
  • No fees (loan origination, application, and insufficient funds fees)
  • Cash rewards for good grades
  • 24/7 access to U.S.-based student loan specialists

Cons

  • Must pass a credit check
  • Be pursuing a degree
  • Be enrolled part-time or full-time in a degree program
  • Meet satisfactory academic progress
  • Customized loan limits and rates
  • Customized repayment options
  • In-school or deferred payment options

#10 RISLA

Best for Student Nurses

Apply now

RISLA

4.6
Scholaroo Rating
Fixed Rates Starting (APR)4.45%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

RISLA is a non-profit institution providing multiple financial products and services to U.S. citizens since 1981. It provides private student loans to graduates, undergraduates, and parents. It also provides refinancing loans and certificate loans to students. RISLA is ideal for students on their way to becoming nurses as they can pay zero interest for the first few years of their loan.

Pros

  • Multiple repayment options
  • Auto-pay rate discounts
  • No application fees
  • No origination fees
  • No late fees
  • Multi-year approval program is available
  • Nurses pay zero interest on student loans for up to 4 years

Cons

  • Loan limit of $1,500 - $50,000 per year
  • Credit-based loans
  • Minimum income requirement of $40,000
  • Cosigner required for students with poor credit
  • Must be a U.S. citizen or permanent resident
  • Must Attend a Title IV Degree Granting School
  • Must be enrolled at an eligible Public or Non-Profit Institutions of Higher Education
  • Non-Matriculating Students can also apply
  • Must meet minimum credit and income requirements, or have a cosigner
  • 10 to 15 years repayment terms
  • Deferred repayment option available with 6 months grace period

#11 ISL Education Lending

Multiple Private Loan Options

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ISL Education Lending

4.5
Scholaroo Rating
Fixed Rates Starting (APR)3.85%
Variable Rates Starting (APR)6.10%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Iowa Student Loan Liquidity Corporation or ISL Education Lending was established in 1979 and is a nonprofit corporation. ISL offers private loans to undergraduates, graduates, parents, and families. They offer other types of programs too like refinancing, scholarships programs, programs for families and reinvest funds in programs. They have options for both cosigner and no cosigner loans for students.

Pros

  • Flexible repayment options
  • No origination, prepayment, or late fees
  • No-cosigner loans also available at a fixed rate
  • Can borrow up to the cost of attendance

Cons

  • Not available to international students
  • A minimum credit score of 660 for cosigned loans
  • Must be of majority age at the time of application or be an emancipated minor, or else a cosigner is required
  • Must not have defaulted on any private or government student loan
  • Must not have an active bankruptcy case.
  • Must be attending any nonprofit, Title IV eligible, degree-granting, accredited college or university
  • Must be enrolled at least a half-time
  • Must be making satisfactory academic progress in an eligible education program
  • Must be a U.S. citizen or permanent resident residing in the United States
  • Immediate payment, interest-only payment, and deferred payment options are available
  • 10 or 15 years repayment terms

#12 MPOWER

Best for International Students

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MPOWER

4.5
Scholaroo Rating
Fixed Rates Starting (APR)12.99%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

M Power specializes in lending to international students and they base their loan decisions on a student’s future potential rather than past credit. It also provides refinancing services and scholarship options to help international students achieve their dreams in the U.S. Their loan amounts range from $2,001 to $100,000 which can be helpful for international students as their tuition cost is usually higher than locals.

Pros

  • Allows pre-existing loans from other lenders
  • Available for international students
  • May cover 100% of education expenses, including living expenses
  • No cosigner loans
  • High maximum loan limit of $100,000
  • No prepayment penalty
  • Provides visa support and career development guidance
  • Have fixed interest rates

Cons

  • 5% origination fee
  • Late or invalid payment fee
  • High starting interest rates
  • Must be an international student, DACA recipient, U.S. citizen, refugee, or asylum-seeker
  • Must be an undergraduate or graduate student within 2 years of graduating or about to begin a 1-year or 2-year program
  • Must be enrolled in an approved school in the U.S. or Canada
  • 10-year repayment term
  • Interest-only in school payments and for six months after graduation

#13 Edly

Best for Career Training Loans

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Edly

4.4
Scholaroo Rating
Fixed Rates Starting (APR)9.40%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Edly offers private student loans with income-based repayment options. It is an ideal lender for career training loans without a cosigner. Along with career training student loans, they provide no-cosigner loans to undergraduates and graduates too. EDLY has options for cosigned loans too for students who want more affordable loans as cosigners can help decrease the rates you get.

Pros

  • No credit check or cosigner is required for most EDLY loans
  • Flexible Income-based repayment
  • No payment is required if the borrower’s income is less than $30,000 per year
  • Payments can be deferred in case you lose your job
  • Fast application decision
  • Prequalification available

Cons

  • Low maximum yearly loan limit of $15,000 and lifetime borrowing of $25,000
  • Unavailable to international students
  • No cosigner loans available for limited majors
  • Not available to students in Colorado, Vermont, Maine, West Virginia, and Iowa
  • Must be a U.S. citizen or permanent resident
  • Must be a current college junior, senior, or graduate student at an eligible institution
  • Must be enrolled at least half-time
  • Must be from an eligible state
  • Must be majoring in a supported program for no cosigner loans
  • 7 to 12 years repayment terms
  • Deferred payments are offered in case of unemployment
  • Income-based payments after graduation provided that you meet the $30,000 minimum income threshold
  • Four-month grace period after graduation
  • In-school payments as low as $25/month for cosigned loans

#14 Education Loan Finance

Great Customer Relations

Apply now

Education Loan Finance

4.4
Scholaroo Rating
Fixed Rates Starting (APR)3.20%
Variable Rates Starting (APR)1.20%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Education Loan Finance, popularly known as ELFI is an affiliate of SouthEast Bank in Tennessee. ELFI was launched in 2015 and aims to assist students with private loans and refinancing. SouthEast bank provides different loan types that cover both undergraduate and graduate programs. Upon applying, borrowers are assigned a Student Loan Advisor who walks them through the whole process.

Pros

  • No loan origination or application fee
  • Have refinancing options
  • Available in all the U.S. states

Cons

  • Requires a minimum credit score of 680
  • U.S. citizens or permanent resident aliens
  • Be at the age of majority
  • Enrolled for an undergraduate, graduate, or postgraduate program
  • Flexible repayment terms
  • Loan repayment term of 5–15 years
  • Different loan repayment options

#15 LendKey

Best for Customer Service

Apply now

LendKey

4
Scholaroo Rating
Fixed Rates Starting (APR)4.89%
Variable Rates Starting (APR)4.89%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Lend Key uses its digital platform to offer financial assistance to borrowers. They have been partnering with banks and credit unions since 2009 and they aim to offer different loan options to students. Students enrolled in degree programs from approved accredited schools are encouraged to apply for this private student loan.

Pros

  • Students can borrow up to 100% of the cost of attendance
  • No loan origination or application fee
  • Does not require a cosigner

Cons

  • Late payment and insufficient funds charges
  • U.S. citizen or permanent resident
  • Have an established credit history
  • Steady source of income
  • $25 monthly proactive payment
  • Monthly full interest payment
  • Loan term is 5–20 years

#16 A.M. Money

Good for Merit Based Loans

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A.M. Money

4
Scholaroo Rating
Fixed Rates Starting (APR)7.95%
Variable Rates Starting (APR)N/A
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Chicago Student Loans by A.M. Money bases its loans on merit instead of credit or income. Due to this reason, they do not require a cosigner either. They offer flexible repayment options based on the applicant’s income after graduation. This makes this loan highly favorable for students with academic excellence and poor credit.

Pros

  • Offers income-based repayment option
  • Flexible repayment options
  • No cosigner requirement
  • No credit or income requirements
  • Can make in-school payments to pay off loans earlier
  • Can borrow up to the total cost of attendance

Cons

  • International students are not eligible
  • Students must meet Satisfactory Academic Progress (SAP)
  • Charges a 4.5% origination fee
  • Cannot borrow less than $3,750 per year
  • Must be a U.S. citizen or resident
  • Must have junior or senior standing and attend an eligible institution
  • Must have above-average GPA
  • Must be Pell-Eligible or near Pell-Eligible
  • 6-month grace period with deferred payments
  • Forbearance available
  • Income-based repayment plan offered
  • Options for in-school payments to pay off loans faster

How to Get Private Student Loans

Following are the general eligibility requirements and steps to apply for private student loans.

General Eligibility Requirements

The eligibility criteria for loans vary from one lender to another. The most common requirements are listed below.

  • Attend an eligible Title IV-accredited school
  • Enrolled at least part-time in a degree-granting program
  • Must be a U.S. citizen or a permanent resident
  • Have a good credit score or a credit-worthy cosigner

Steps to Apply

The following are steps to take when applying for a student loan with private institutions.

  1. Exhaust federal loan options first: Before jumping to private loans, make sure that you have considered all your federal options first as they come with various benefits that private loans do not offer.
  2. Review your credit score: Most private lenders require good credit to approve the loan. This helps them determine how risky you are as a borrower. Upon applying, they will run a credit check on you to see if you meet their minimum criteria. In case, you do not meet their minimum requirement, which is usually around the mid-600s, you will need a credit-worthy cosigner to apply for the loan.
  3. If possible, get a cosigner: Adding a cosigner to your application can help you in different ways. If you have bad credit, adding a cosigner to your student loan application will help in getting the loan approved. Students with good credit can get approval without a cosigner, but they can get better rates on their loans if they can add a credit-worthy cosigner to their application. Therefore, it’s wise to find a credit-worthy cosigner before applying for a loan. A cosigner can be anyone from your family or friends that has good credit. Upon co-signing, they become equally liable for the loan and will have to pay for you in case you are unable to make regular payments.
  4. Compare lenders: Compare different lenders to see which of them offers the lowest interest rates and if you are able to meet their eligibility requirements. You can get prequalified with a soft credit check to get a quote on the rates and terms that you are eligible for. Choose the one that offers you the lowest rates and best repayment terms.
  5. Gather documents: Once you have chosen your lender, go through the list of required documents on their website and gather all the relevant documentation on time. This helps in a smooth and quick application process. The information required by lenders generally includes your personal information like name and address, your social security number, financial information like annual income, and employment information. In case you have a cosigner, they would require similar information about them too.
  6. Submit your loan application: Once you have all your documents ready, you can apply for a loan through the lender’s website. The online loan application only takes a few minutes. After submitting your application, the lender will most likely run a hard credit check on you or your cosigner to see if you meet the minimum.
  7. Sign your loan agreement to get the loan: Upon approval, you will receive a final loan agreement containing all the information about your loan. The rates and terms you get may be different from the initial quote. So, make sure to read the agreement thoroughly before signing it. Once you accept the terms and conditions of your loan, the amount will be disbursed to your selected institution generally.

How to Choose the Best Private Student Loans

There are six important points to keep in mind while choosing private student loans.

  • Interest Rates: Different lenders have different interest rates and thus, this should be taken into consideration when choosing a private student loan. Ensure that you study and understand both the variable and fixed interest rates before settling on any private student loan.
  • Repayment terms: The repayment period is very important when choosing a private student loan. Some lenders have fixed terms whereas others are customized to the suit the needs of the student. Remember, most lenders offer lower interest rates for shorter payment periods and higher interest rates for longer repayment periods and defaulters.
  • How much You Can Borrow: Most loans have limits and are regulated in terms of how much students can borrow. There are loans with high or low limits and students must settle for a lender that will provide the amount they need. Alternatively, a borrower can consider approaching different financial institutions and combining multiple loans to meet the full amount needed.
  • Application Process: Some lenders have a straightforward application process, while others are a little bit complicated. When choosing the best private student loan, be on the lookout for what is needed in the application process. Ensure that you are well aware of all the requirements needed to complete the application.
  • Eligibility: It would be a waste of time and resources to apply for a student loan that you do not qualify for. Before choosing a loan, ensure that you still qualify throughout the process. Make sure to familiarise yourself with the criteria and requirements regarding eligibility for federal student loans to ensure that you qualify for the loan.
  • Company Reputation: A company’s reputation speaks volumes about how future relationships will be. Most reputable companies have been in business for a long time and have many years of experience. It is safer to choose a bank that has transparent policies and that has good reviews from previous borrowers.

Difference Between Private Student Loans and Federal Student Loans

Private Student Loans

Banks and financial institutions provide private student loans, and the approvals of these loans often depend on the credit score. Private student loans can be acquired with or without a co-signer and the limits can vary depending on the institution, the credit score, and other eligibility factors. There are also parent private student loans available to help parents secure funds for their child’s college tuition.

Federal Student Loans

Federal student loans (also known as Federal Stafford loans) are provided by the government and are approved through FAFSA submission. There are usually three kinds of federal loans that apply to students, namely direct subsidized and unsubsidized, and PLUS loans such as the Grad PLUS loan.

FAQS

How do I find the best private student loans?

Scholaroo has a review on the best private student loans. Skim through the site and find all the details about the various private student loan lenders. Identify what you need in a lender and gauge that against your financial standing to find the best private student loan.

Which private bank is best for student loan?

The bank that provides the best private student loan is the one with the best rates and has flexible repayment options. Sofi is our highest-rated private student loan lender followed by Sallie Mae and College Avenue.

What is the minimum credit score required for a private student loan?

Most private student loan lenders require a good credit score that is at least in the mid-600s for loan approval. However, the minimum credit requirement for every lender varies and students with lower credit scores may also be able to find one.

When to get a private loan?

Only take out private loans after fully exhausting all your federal options or if you do not qualify for federal aid.

How much money can I borrow through private student loans?

Most lenders allow you to borrow up to 100% of your school-certified cost of attendance. Some lenders, however, do have a yearly cap which can vary greatly from one lender to another.

Is it smart to take out private student loans?

Before taking out private loans, it’s best to exhaust your federal aid options first. This is because federal loans come with many long-term benefits like loan forgiveness, forbearance, and deferment. If there is any gap left between the federal aid you have received and your total educational expense, you can get private student loans to fill the gap. This way, you will be taking out a lower amount in private loans meaning more manageable loans.

Many people are unable to get any federal aid and may only have the option of applying for private student loans. To get the best deal on these loans, consider applying with a credit-worthy cosigner as adding them to your application will lower the interest rate and will give you peace of mind as they can support you in case you find making a payment hard in one of the months during the loan term.

How to get the lowest interest rate on private student loans?

There are a few ways to get the lowest interest rates on private student loans including setting up automatic payments which makes you eligible for rate discount, refinancing with another lender that offers cheaper rates, getting a credit-worthy cosigner, building credit using a student or secured credit card, and negotiating with the lender.

Can I get a private student loan with bad credit?

Most lenders require a good credit score for loan approval. In case you have bad credit, you can apply for these private loans with a cosigner. Moreover, for students with bad credit, there are some GPA-based private loans that do not consider credit as the most important factor in approving a loan. Some lenders also base their decision on the potential future income of the student applicant too.

What expenses do private student loans cover?

Student loans are primarily to cover the cost of tuition. If there is any surplus, you can use it to cover education-related living expenses like housing and rent, books and supplies, transportation, groceries, etc.

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

Different lenders have different eligibility requirements and if you are unable to meet them, adding a cosigner to your loan can help you get approved. In most cases, a cosigner is required if there is a minimum credit and income requirements as students generally are unable to meet them as they are still studying.