Private Student Loans: Sifting the dirt to find the best loan

Private Student Loans may be an option for funding your college degree. With the option for Federal Subsidized and Unsubsidized loans, why would a student need a Private Student Loan? For those wanting to explore other options besides loans from the federal government and for those who may not wanting the federal government involved at all in their college funding, then Private personal loans may be an option. In some cases the allotment of federal funding may not be enough therefore, private personal loans may be the only way to supplement the flow of funding.

By definition, private student loans is a loan taken out by the student that is not issued by the federal government. They are typically funded by banks, credit unions, and any other type of lenders. Private education loan providers has their own set of terms, interest rates, and eligibility requirements. They are not so “cookie cutter” with regards to things such as interest rates and repayment options. They each are different so it’s important to do your research and find out which would be the best lender for your private student loan.

What are the differences between a Private Student Loan and Federal Student Loan?

What are the differences between a Private Student Loan and Federal Student Loan? Federal student loans are from the government. They are legal agreements so like with anything in life make sure you know what you’re singing. The types of loans are Direct Subsidized, Unsubsidized, and the Plus loans.

Private student loans and this is from my experience are used after one has explored or exhausted scholarships, grants, and federal student loans.

Below is how they differ:

Private Student loans

  • Offer a choice of fixed and variable interest rates. Fixed stay the same so you can predict the monthly payments, and variable can go up down and all around which is related to an increase or decrease in the loan’s index.
  • They have different repayment plans including the options that allow you to make interest only or fixed payments while you are in school.
  • They may be taken out by a student (often with a cosigner) i.e. parent or credit worth individual.
  • Financial need is isn’t taken into consideration.

Federal Student Loans

  • Interest rates are fixed and usually lower than private loans.
  • Payments aren’t due until after a student graduates or leaves school.
  • Amount you can borrow is determined by FAFSA completion.
  • Financial need is taken into consideration.
  • Offers more flexible repayment plans.

See the chart below for a more visual guide and some more differences.

Private Student Loan Eligibility

Much like the Federal Loan counterpart, the Private Student Loan has their own set of eligibility requirements. Now there will be specific criteria from lender to lender but the following are some shared features that they all will consider.

  • Enrolled in an eligible school – You need to be a student at an eligible school. Sometimes community colleges and trade schools aren’t always eligible for private student loans. However, some lenders have specific loans for trade and vocational schools.
  • Citizen requirements – You must be at least 18 years or older and must be a U.S. citizen or legal resident. If you are an international student then to potentially eligible for private loans then you may need to have a U.S. citizen or legal resident cosign for you.
  • Credit conditions – Private lenders will take a look at your credit history, income and debt-to-income ratio. Basically the lenders are wanting to ensure that you don’t have a history of defaulting on loans. It’s hard to “pin down” the exact score they are looking for but most look for a score in the mid 600s at minimum. Consistent income and debt-to-ratio are vital as the lenders want to see if you can pay back the loan.
  • Cosigner- If unable to be approved for a private student loan on your own, then you will need a cosigner. This is a constant for any lender you research.
Pros of the Private Student Loan

There are some Pros to these Private loans:

  1. Rewards you (or cosigner) for excellent credit – That can result in a lower interest than the federal student loan
  2. Higher Borrowing Limits – If you are going to a pricey private school then replying on federal students is not going to be realistic
  3. Statute of limitations – So when you default on federal student loans, there is no statute of limitations. No matter what happens or how long your debt is in default you eventually have to repay your loans. Your wages and tax refunds can even be garnished for your federal student loan debt. With Private Student Loans, there is a statute of limitations upon defaulting. It’s going to vary by state and from I see ranging about 3-10 years. Now this is not an invitation to start defaulting on any loan out there. Just trying to show the different.

How to apply for Private Student Loans?

If interest in applying for a private loan, then you will need to go to the lender’s website and complete the application. Once you have identified the school you will be attending and how much you will need to borrow then you can begin to submit applications. There is zero cost when applying for private education loans. The application will consist of personal and financial information, to select interest rate and repayment option.

What happens after you apply and if approved then you will need to sign the loan terms. The school will then receive the information from the lender and work on certifying the loan. This all happens before the disbursement of the loan.

Private Student loans without cosigner

So what if you are wanting/needing a private student loan but cannot find a cosigner? It’s a hard thing to convince someone to be a cosigner for your private loans. With that said are there any private student loans for those who don’t have a cosigner? Actually there are!!!!

Two in particular (one we will discuss more later on) are:

 Ascent – For upperclassmen and graduate students with no credit, income, or co-signer. You will be evaluated based on earning potential.

MPOWER– Ideal for international students and students with deferred action for childhood arrivals. You must be from one of the 180 countries that MPOWER works with. 

Private Loan Lenders

There are quite a few Private lenders when research for a private loan. So how do you know who they are, and which ones are good. The next section will be dedicated to reviewing the Best Private Student Loans. Much of these lists can be viewed as subjective and I’ve heard a difference of opinions depending on who you ask. There are always going to be some people who have had a positive experience and those who have had a negative experience. With that said, below we will be looking at these lenders and providing the facts that will assist you in making your decision.

Here are the ones we will be reviewing (in no particular order).

Sallie Mae

The biggest player in the game is by far Sallie Mae. They offer undergraduate and graduate loan options. With their size they can basically offer anything they want. Taking about only 15 minutes to apply, there are no loan origination fees with Sallie Mae.

APR, Credit Score, and Term Lengths

  • Fixed APR – 4.7%-11.35%
  • Variable APR – 3.37% – 10.75%
  • Minimum Credit Score – Does not disclose although typical score of approved borrowers and/or co-signers is around 748.
  • Term Length – 5 to 15 years

Sallie Mae Quick Note

Sallie Mae is one of the few lenders that will work with part-time students. They offer free credit score tracking and lots of online tutoring if need be. They are a viable source and should be at least researched heavily when looking at private lenders.

College Ave Student Loans

A full-service lender with loans available for undergraduate and graduate, College Ave is a viable option. Their intent is to provide an “uncomplicated” experience for taking out private loans. They just do student loans and that’s it so their focus is strictly on making the process and whole experience seamless and enjoyable (well as enjoyable as it can be for taking out loans).  

APR, Credit Score, and Term Lengths

  • Fixed APR – 4.7%-12.94%
  • Variable APR – 3.70% – 11.98%
  • Minimum Credit Score – Mid-600s (typical credit score for approved borrows seems to be mid-700s).
  • Term Length – 5,8,10, or 15 years

College Ave Quick Note

College Ave does not perform “hard” credit checks so you can see if you’ll qualify and what rate you can get without taking a ding on your credit. They also work well with international students that have a co0-signer and are one of the more flexible lenders in terms of loan repayment.  


Credible is interesting and unique as they are not a direct student lender. What they do is with one application, you can get rates for up to eight private loan lenders. They are saving you time shopping around and comparing.  

APR, Credit Score, and Term Lengths

  • Fixed APR – Can start as low as 4.40%
  • Variable APR – Can start as low as 3.17%
  • Minimum Credit Score – Varies
  • Term Length – Varies

Credible Quick Note

Again Credible is there to help you save time. The service is free as they are getting their money from the partnered lenders. This allows you to shop with confidence and make sure that you are making the absolute best possible decision for your private student loan.


With funded loans via partnerships with community credit unions and banks, Lendkey is dedicated in having community financial institutions succeed in online lending. They match potential students (consumers) with community banks and credit unions which makes for a very transparent process. 

APR, Credit Score, and Term Lengths

  • Fixed APR – Can start as low as 5.36%
  • Variable APR – Can start as low as 4.10%
  • Minimum Credit Score – Didn’t disclose
  • Term Length – Varies

Lendkey Quick Note

Ledkey has no application fees and aims to make the process very easy for those needing to take out a loan. Their strength lies in their unique funding model. Credit unions tends to be more favorable with rates and fees. Their high tech and “cloud” based experience makes it so there is a feeling of relief using their service. 

SunTrust Private Student Loans

Another moderately sixed play is SunTrust. They offer private loan options for undergraduate and graduate students with good credit score. Of course if you don’t have a good credit score then a co-signer will be necessary.

APR, Credit Score, and Term Lengths

  • Fixed APR – 4.30-11.05%
  • Variable APR – 3.50-10.55%
  • Minimum Credit Score –600
  • Term Length – 7,10, or 15 years

SunTrust Quick Note

SunTrust stands out with a wide variety of repayment options. For example, interest only payments are made available for up to 36 months after a student graduates if there happens to be financial hardship.

Discover Student Loans

Since 2007, Discover has been offering private education loans for undergraduate and graduate students. In my professional career, I’ve seen them being used more and more as of late. The feedback that I receive is that they are very consumer friendly and have great customer service.

APR, Credit Score, and Term Lengths

  • Fixed APR – 4.74-12.49%
  • Variable APR – 3.37-11.87%
  • Minimum Credit Score –Does not disclose although typical credit score of approved borrowers is above 750.
  • Term Length –15 years

Discover Quick Note

With more flexible repayment options for those who are going through hardships, Discover really tries to focus on the borrower. There are no origination or late fees.

Citizens One Private Student Loans

With roots dating back to the 1800s, Citizen One is a division of Citizens Bank. They offer undergraduate and graduate student loans and refinancing for existing loans.

APR, Credit Score, and Term Lengths

  • Fixed APR – 4.40-12149%
  • Variable APR – 3.29-11.62%
  • Minimum Credit Score –Does not disclose
  • Term Length –5, 10, or 15 years

Citizens One Quick Note

International students can qualify with a co-signer and there are loyalty discounts on existing Citizen Bank customers. It’s another solid option for students. With an additional interest rate discount of 0.25% to those with a Citizens Bank account, it may be a good option.

Ascent Private Student Loans

Ascent offers two student loan options. They offer loans for those who want to use a co-signer and for non-cosigned private student loans for undergraduates. It’s aimed for those borrowers who lack a credit history or income. This non-cosigned version is only available for juniors, seniors, and graduate students.

APR, Credit Score, and Term Lengths

  • Fixed APR – 3.97-12.93%
  • Variable APR – 3.63-12.90%
  • Minimum Credit Score –600
  • Term Length –5, 10, or 15 years

Ascent Quick Note

Ascent’s two loan option makes it appealing and shows that they are really wanting to help people. Their forbearance is longer than many other lenders and you can make biweekly payments via autopay. Ascent does emphasize one’s future earnings over income or credit score.

Wells Fargo Private Student Loans

Another lender that in my professional career I would hear a lot of students use (next to Sallie Mae) is Wells Fargo. They have a number of benefits which includes competitive interest rates, low fees, and an easy application process.

APR, Credit Score, and Term Lengths

  • Fixed APR – 5.49-10-93%
  • Variable APR – 4..80-10.72%
  • Minimum Credit Score –Did not disclose
  • Term Length –15 and 20 years

Wells Fargo Quick Note

If you have a qualifying checking account you may be eligible for a discount on the interest rate. Wells Fargo is another lender that has a lot of options due to the fact that they are large. They do not reveal your rate until you submit the application and a hard credit check will occur. However, there are few fees and co-signers can be released from the loans which is nice to know.

Borrowing Amounts Private Student Loans

Student will need to let the lenders know how much they are looking to borrow. Typically there are limits based on cost of attendance so please ensure you have that number when applying. A good rule of thumb is to borrow only what you can afford to pay back later.

It’s super helpful to know what you earning potential will be. If you are unsure of this, you can visit the U.S. Department of Labor at The amounts are also going to vary by lender. Most will require the school to certify the loan so the school will (and should) ensure that you are borrowing no more than the established cost of attendance.

Repayment for Private Student Loans

There are a few options to repay a private student loan:

  • Immediate repayment plans while in school. This helps with and will minimize the interest. However, that’s not too realistic.
  • Interest-Only repayment plan – monthly payments are smaller and your loan balance won’t grow while in school.
  • Partial interest repayment plan – this lets you pay a fixed amount ($25 or $50) which doesn’t take care of all the interest you owe but keeps the loan balance from growing quickly.
  • Full deferment – This is where you won’t pay until after school Some lenders offer a six month grace period similar to the federal loans.

It’s suggested that if you can do the immediate repayment plan to do so as it will minimize the interest you pay eventually resulting in the greatest savings. This is due to the fact that you are paying down both the interest and principle while in school. This will allow you to have a good head start. Of course a downside is the fact that you have to make the payments while in school which is sometimes not realistic.

Private Student Loan Consolidation

A very common question with regards to private student loans are if they can be consolidated. The best advice is to contact your lender and see if that option exists. Each lender will have a different set of rules so be sure to read them very carefully. Some may not want you to have more than a certain amount in aggregate student loan debt. There may also be limits as to how much you can consolidate.   

How to choose a Private Education Loan

There is a lot of information out there and just in this blog alone there has been an insane amount of information thrown at you. So how on earth to do you choose? How do you truly know that this private loan/lender is right for you?

Here is what you want to focus on at the end of the day:

  • Interest rates
  • Fees
  • The totally amount of money you will be borrowing
  • Your potential salary that you can be earning after graduation

Map all of this out and take the time to do so. Especially if some of the lenders will not conduct a credit check then it doesn’t hurt to explore all the options.

Final Thoughts on Private Student Loans

Depending on your situation, private loans may need to be an option. It’s important to know the differences between the private loans and the federal loans. The federal loans are more flexible with after the loans are taken out. Their offer potential income-driven repayment plans, deferment, and forbearance options. Although the private loans offer hardship options, they do not have what was previously mentioned for the federal loans.

Another important fact to remember is that private loans for college mirror the federal unsubsidized loans in that the interest will start to accumulate immediately. The private loans are based on your (or cosigner’s) creditworthiness. It your credit is adverse then you will have to recruit a cosigner. In my professional experience most family members are reluctant to do this. Like everything else in relation to this journey, the key is this information right here and to do your research.

Tuition Drop Podcast

You can listen to our episode of the Tuition Drop Podcast below where we discuss Private Student Loans.

Tuition Drop Podcast – Private Student Loans
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