If you're planning on going to college, you'll likely need to take out student loans to pay for it. According to the College Board, in 2020–2021, the average cost of tuition and fees at a public university for an in-state student was $10,560. The cost jumped to $37,650 for a private school.
Federal aid may not be enough to cover the total cost of attendance. In that situation, taking out private student loans can help fill the gap.
But which lenders offer the lowest rates and the most robust benefits? We've compiled a list of the best private student loan lenders available today to help you find the best option for you.
Best Student Loans of December 2021
- Best Student Loan Marketplace: Credible
- Best Overall: Rhode Island Student Loan Authority
- Best Interest Rate: College Ave
- Best Student Loan Consolidation: Splash Financial
- Best Parent Student Loan: College Ave
- Best for International Students: MPOWER Financing
- Best for Students Without a Cosigner: Funding U
It's best to exhaust all of your federal student loan options before even considering private student loans. Rates for federal loans issued between July 1, 2021 and June 30, 2022, are just 3.73% for undergraduate Direct Subsidized and Unsubsidized loans.
Best Student Loan Marketplace : Credible
Before applying for a student loan, it's smart to compare rates from several different lenders to ensure you get the best interest rate and loan terms. Instead of doing this process on your own, which can be frustrating and time-consuming, you can use a student loan marketplace to speed things up.
With Credible, you fill out a simple form and get rate quotes from multiple student loan lenders within minutes. Getting a quote doesn't affect your credit score, and you can view multiple repayment options. Once you find a loan that works for you, you and your cosigner (if applicable) can complete the loan application online.
Using Credible is completely free. Credible gets a referral fee when you apply for a loan through a lender on its marketplace. Credible doesn't include all private student loan lenders available, but it does have a range of top lenders, including Ascent, Citizens Bank, College Ave, and Sallie Mae.
Read the full review: Credible Student Loans
Best Overall : Rhode Island Student Loan Authority
When looking for an undergraduate student loan, it's important to pay attention to interest rates, loan terms, and lender perks that can improve your borrower experience. With those factors in mind, the Rhode Island Student Loan Authority (RISLA) stands apart as the best overall lender.
Despite its name, residents from any state can qualify for a RISLA loan. However, applicants who live, work, or attend college in Rhode Island may be able to get a lower interest rate than other borrowers.
Applicants can borrow $1,500 to $45,000 per year to pay for their undergraduate degrees. There are no application, origination, or prepayment penalties.
Unlike some other lenders, RISLA only offers fixed-rate loans. However, these loans have fairly low interest rates. The interest rate on a loan with Student Immediate Repay is 2.99%, while a Student Deferred Repay loan has a rate of 4.74% (both include an autopay discount).
As an undergraduate borrower, you have 2 repayment options:
- Student Immediate Repay: With this option, you begin making payments 15 days after the final loan disbursement. You'll get the lowest possible interest rate.
- Student Deferred Repay: If you opt for Student Deferred Repay, you'll get a higher interest rate. However, you won't have to start making payments until 6 months after you leave school.
While RISLA offers low interest rates and a variety of repayment plans, what really sets the lender apart is the benefits it provides borrowers:
- Income-Based Repayment: If you're facing a financial hardship and can't afford your payments, you may qualify for RISLA's Income-Based Repayment Plan. With this approach, your repayment term is extended to up to 25 years, and your payments are based on your income and family size.
- Nursing Reward Program: Rhode Island resident or students attending eligible schools in Rhode Island may be eligible for the Nursing Reward Program. Under this program, RISLA will lower the interest rates on the loans of qualifying borrowers to 0% for 48 months.
- Loan Forgiveness for Interns: Students who complete an eligible internship can receive up to $2,000 in student loan forgiveness.
- Autopay Discount: Sign up for automatic payments and receive a 0.25% discount on your interest rate.
- Forbearance: In some cases, you may be able to temporarily postpone your payments if dealing with financial issues.
- Multi-year approval: Some borrowers will qualify for RISLA's multi-year program. As long as your information and your cosigner's income, credit score, and other key information remain consistent or improve, you can qualify for additional loans without having to submit another application.
RISLA provides families with information on how to find financial aid, including federal loans, grants, and scholarships. It also has programs that reward students for completing internships, helping them prepare for careers after graduation.
Read the full review: RISLA Student Loans
Best Interest Rate : College Ave
When you’re applying for a student loan, you can often choose between variable and fixed interest rates. While fixed-rate loans have the same interest rate for the duration of the repayment term, the interest rate on variable-rate loans can fluctuate over time. If you want to pay off your debt quickly, opting for a variable-rate loan can allow you to take advantage of the lower initial rate.
College Ave offers some of the lowest rates on undergraduate student loans:
- Variable Rate: As low as 0.94% (including 0.25% autopay discount)
- Fixed Rate: As low as 2.94% (including 0.25% autopay discount).
With College Ave, you can borrow up to the total cost of attendance (COA). There are 4 different repayment options to choose from, along with 4 different term lengths, and you can defer your payments until after graduation or opt to make in-school payments.
College Ave offers the following repayment options:
- Full Principal and Interest Payment: Start repaying principal plus interest right away to save the most over the life of your loan
- Interest-Only Payment: Make payments to cover the interest only while in school
- Flat Payment: Make $25 payments while in school to reduce accrued interest
- Deferred Payment: Pay nothing while in school, but interest will still accrue
Read the full review: College Ave Student Loans
Best Student Loan Consolidation : Splash Financial
Private student loan consolidation, also known as student loan refinancing, can be a smart way to lower your interest rate and save money over the life of your loan. Splash Financial is our pick for top student loan refinancing company.
There’s a couple different factors that impacted our decision:
- Interest rates: Splash Financial offers very low interest rates: variable rates as low as 1.87% (autopay included) and fixed rates as low as 2.30% (autopay included).
- Cosigner release: Typically, Splash borrowers can request a cosigner release after making 12 consecutive monthly payments on time.
The minimum refinance loan amount is $5,000. There is no maximum loan amount—it will depend on the specific lending partner that refinances your loans and other factors in your loan application. In order to refinance through Splash Financial, you must have obtained a 4-year degree from a Title IV accredited institution or an associate degree in an eligible field.
Read the full review: Splash Financial Student Loan Refinancing
Best Parent Student Loan : College Ave
As a parent, you want what's best for your child. And that may mean helping them pay for their education by taking out a parent student loan.
College Ave offers 11 different repayment terms for parent student loans, ranging from 5 to 15 years in length. That flexibility allows you to choose the loan term that works best for your budget.
College Ave allows parents to borrow between $1,000 and the total COA. As an added perk, the lender allows you to get up to $2,500 of the loan delivered directly to you, so you can manage the purchasing of items such as books, dorm supplies, and a new computer for your student.
The lender also has low interest rates, with variable rates as low as 0.99%, and fixed rates as low as 2.94% (lowest rates include an autopay discount). College Ave has three different repayment plans, so you can decide which is best for you:
- Interest-Only Payment: While your child is in school, pay only the interest charges each month.
- Interest Plus Payment: Pay the monthly interest charges plus whatever extra amount you decide to put toward principal each month while your child is in school.
- Full Principal and Interest Payment: Start repaying the full payment—including both principal and interest—immediately once the loan has been disbursed.
Read the full review: College Ave Student Loans
Best for International Students : MPOWER Financing
Unfortunately, international students often struggle to find private student loans to pay for school, especially if they don’t have access to a cosigner who is a U.S. citizen. For those students, MPOWER Financing is the best lender.
MPOWER Financing offers undergraduate and graduate student loans to international students as well as U.S. citizens, permanent residents, and Deferred Action for Childhood Arrivals (DACA) students attending 350 approved colleges and universities in the U.S. and Canada.
MPOWER Financing doesn’t require applicants to have a cosigner, an established credit history, or collateral.
For international undergraduate students, you can borrow $2,001 to $25,000, with a $50,000 lifetime borrowing limit. The undergrad APR is 14.98% (12.94% for grad students), but you can qualify for up to 1.5% in rate discounts, including:
- 0.50% automatic payment discount
- 0.50% on-time payment discount
- 0.50% graduation and employment discount
Both graduate and undergraduate loans require interest-only payments while you’re in school and during your 6-month grace period following graduation, and both have a 10-year repayment term.
Read the full review: MPOWER Financing Student Loans
Best for Students Without a Cosigner : Funding U
As a college student who may not have an established credit history or any income, you can struggle to qualify for a private student loan on your own. If you don't have a parent or relative to act as a cosigner, finding a lender who will approve your loan application can be difficult. For those who don't have access to a cosigner, Funding U may be the best option.
Unlike some other lenders who offer non-cosigned loans to only college juniors and seniors, Funding U allows undergraduate students of all grade levels to qualify for a loan. You must be a U.S. citizen or permanent resident who is over the age of 18 and enrolled in a 4-year degree program at an eligible 4-year college. You can borrow between $3,000 and $15,000 per year. Your eligibility for a loan is based on your GPA (minimum varies by grade level), your project earnings, total debt, historical data from your school, and more.
The fixed interest rate on undergraduate student loans for the 2020-21 school year is 7.99% to 12.99%, which includes a 0.5% autopay discount. You can make either $20 minimum payments or interest-only payments each month you're in school for up to 51 months. Loan repayment (principal plus interest) begins 6 months after graduation.
Unfortunately, Funding U only lends to residents of certain states. You must live in one of the following states to qualify for a loan: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin.
How Do Student Loans Work?
Student loans are money borrowed from the government or a private lender to pay for college. The loan has to be paid back after graduation, along with the interest that has been accrued. The loan can usually be used to cover tuition, room and board, books and other school related expenses. Student loans are different from scholarships and grants which don’t have to be paid back.
You can apply for a student loan online and fill out your (and your parent’s, if applicable) financial information. Student loan qualifications are different depending on the type of loan you receive but can include FICO score and income. Typically, you will need multiple student loans to cover your entire tuition and all related expenses. A financial aid counselor from your high school or your future college should be able to help you better navigate the process.
What Are Some Alternatives to Student Loans?
If you decide that a student loan isn’t for you or want to know what other options you have, there are some alternatives:
- Parents pay for college
- Merit-based scholarship
- Athletic scholarship
- Work-study aid
- Savings or an inheritance
What Are the Different Types of Student Loans?
Typically, student loans fall into two major categories: federal and private. Private loans are also called alternative loans.
Federal student loans: There are multiple types of federal loans but, in general, they have lower interest rates and better repayment terms than private loans. They’re also more readily available and may be easier to obtain than a private loan. They have fixed interest rates and some options aren’t dependent on your credit history.
Private student loans: These should be looked into after federal student loans are exhausted. Private student loans may cover continuing education without a degree, tuition for non U.S. citizens, and for education costs incurred after graduation.
In a recent interview with Carrie Johnson, an Accredited Financial Counselor (AFC®) and an associate professor at North Dakota State University, she said "Federal student loans have many repayment benefits. For example, there are forgiveness options for certain occupations or in the event of a disability. If a borrower is struggling to make payments, there are options to suspend payments for a period of time. Private student loans do not offer these benefits and in many cases, if a borrower passes away, their cosigner is then responsible for the remainder of the loan balance."
How Much Do Student Loans Cost?
The main cost associated with student loans is the interest. However, some loans may also charge origination fees, prepayment penalties, and late fees. Federal loans tend to have lower interest rates so it’s best to apply for them first. Currently, the interest rate on federal student loans for undergraduates is 3.73%.
Are Student Loans Worth the Cost?
Student loans can be expensive, with application fees and making monthly principal and interest payments. They can get especially expensive if you choose to go to grad, medical or law school in addition to a 4-year college. If you have an alternative way to pay for college, then it’s great to explore that first. Otherwise, student loans are generally worth the cost because you’re investing in yourself and your education, which should help you land a higher paying job or acquire the knowledge and skills to start your own business.
How We Chose the Best Student Loans
There are so many federal and private student loans to choose from. We reviewed dozens of student loans and chose the best student loans based on their interest rates, types of loans offered, cosigner requirements, loan consolidation options, and the overall application process.
Research for this article encompassed private student loan lenders of undergraduate private student loans (as well as companies that refinance student loans) narrowed down from national banks, credit unions, and lenders. The criteria for measuring each lender included all available APR ranges for these loans, fees charged, repayment plans and hardship options offered, and the inclusion of additional features such as cosigner release, parent loan availability, and a refinance option.
Ultimately, the "best of" awarded the highest status to the lenders that are available nationwide that offered the lowest fixed APRs, the most comprehensive hardship programs, and the least number of fees.