Top Private Student Loans 2025: Best Lenders Revealed

Understanding Private Student Loans

Private student loans are a financial tool used to fill the gap between federal borrowing and the total cost of college education. These loans can be beneficial when federal aid, scholarships, and personal savings fall short of covering all educational expenses. The best private student loans typically feature low interest rates, high borrowing limits, and flexible repayment options, making them an attractive choice for many students.

Unlike federal loans, private lenders have varying interest rates, repayment terms, and credit requirements. It is essential to compare these details carefully when shopping for a loan. Some of the top-rated student loan lenders include Ascent, College Ave, and Sallie Mae, known for their competitive rates and customer service.

The average tuition has increased over recent years, with in-state tuition and fees at a public four-year university during the 2024-2025 academic year reaching $11,610, according to the College Board. When including housing and food, the total cost of attendance can approach $25,000. Even with federal student aid, covering these costs can be challenging. Federal undergraduate loan limits range from $5,500 to $12,500, depending on the student's year in school and dependent status. Scholarships, grants, and savings can also help, but they may not cover all expenses.

How to Compare Lenders

Before selecting a private student loan lender, it is crucial to consider your priorities and what works best for you. Many lenders offer prequalification, which can help you compare interest rates and terms before making a decision. Consider comparing three to five different lenders using the following features:

• Annual Percentage Rate (APR): The APR represents the interest rate plus upfront fees. It’s usually higher than an interest rate and gives a more accurate picture of your total annual borrowing costs. Compare APRs from different lenders, keeping in mind that your final rate depends on your personal information and might not be the best advertised rate.
• Credit Criteria: Private student loan companies have their own credit requirements. Some might allow you to borrow with a credit score of 660, while others prefer a score above 700. Review the requirements so you understand whether you’re likely to qualify with your credit profile. You might need a cosigner if you don’t meet the credit criteria.
• Loan Amount: Not every private student lender offers the same amounts. Most will authorize enough to cover you up to your school’s cost of attendance, but that’s not always the case. Additionally, some lenders have lifetime limits. Compare lenders to see if you will get the amount you need.
• Repayment Terms: Confirm that you can defer payments until after you graduate if you’re worried about beginning repayment while you’re in school. Once you finish school, you usually have repayment terms of five to 20 years. A longer repayment term usually means lower monthly payments, but you often pay more interest over time. Check to see if the repayment matches your needs.
• Cosigner Release: If you get a cosigner, check if the lender offers a release program. After you make a certain number of on-time payments, your cosigner might be dropped from your loan, relieving them of responsibility. However, not every lender offers cosigner release. You might need to refinance your student loan to remove a cosigner from the loan. If a cosigner release is important to you and your cosigner, focus on lenders that offer this feature.
• Other Perks and Discounts: Some private student loan lenders offer discounts for autopay and for being banking customers. You might also get some perks, like a loan reduction upon graduation. Compare perks like access to financial planning and other items to determine which student loan company offers the best option.

Comparing Private vs. Federal Student Loans

Many experts recommend starting with other forms of student aid, such as grants and scholarships, before turning to loans. Once you have exhausted other student aid and your savings, federal loans are often considered the next step. Federal loans (other than Plus loans) don’t have credit requirements. The interest rates are also usually lower than private student loan rates. While private student loans can have lower APRs for those with excellent credit, in most cases, federal loans are still cheaper.

Private student loans don’t have the same borrowing limits as federal loans and can bridge a funding gap. However, repayment plans aren’t as flexible with private loans.

Pros and Cons of Private Student Loans

While the best private student loans can be part of your college funding strategy, it’s important to understand the advantages and disadvantages:

Pros

• Higher Borrowing Limits: You potentially have access to higher borrowing limits. Federal student loans come with limits that might not meet your needs, especially if you include your total cost of attendance beyond tuition and fees.
• Lower Interest Rates for Those with Excellent Credit: If you have excellent credit, you might qualify for lower interest rates with private loans. For example, the rate for undergraduate subsidized and unsubsidized federal student loans for the 2025-2026 academic year is 6.39%. For borrowers who qualify, private loan rates can be under 4%. Plus, some private lenders don’t charge origination fees, and there are always funding fees with federal student loans.
• More Lender Choices: Rather than getting a loan from the federal government, private student loans offer a variety of lending options, allowing you to compare and choose a program that works for you.
• Access for Those Who Don’t Qualify for Federal Aid: Most citizens qualify for federal student aid, but international students and those who aren’t enrolled at least part-time might be unable to access federal student loans and other federal aid.

Cons

• Fewer Income-Based Repayment Options: While some private lenders offer hardship options, they don’t usually provide multiple income-based repayment plans. Federal loans come with various choices based on your income, as well as an extended payment plan if you don’t want to use the standard repayment plan.
• No Loan Forgiveness Options: Most private lenders don’t offer student loan forgiveness. Federal loans have several forgiveness programs.
• No Automatic Deferment or Forbearance: While you might find deferment and forbearance options with private lenders, they aren’t automatic. Federal student loans have set requirements for deferment and forbearance, so if you meet them, you automatically receive relief.
• Higher Rates for Those Without Good Credit: Federal loan rates are set by a formula created by Congress. Everyone gets the same rate based on the loan they get. Private student loan lenders might charge higher rates based on your credit or a cosigner's credit.
• Harder to Qualify For: Private student loans are often harder for many borrowers to qualify for. You must meet credit and income requirements, while federal loans don’t have those criteria.

How Much Money Can Be Borrowed?

Federal student loan limits are based on your year in school, whether you’re an independent student and how much you’ve borrowed in the past. Your total limit for the Direct Loan program, including undergraduate and graduate loans, is $138,500. You might be able to borrow more through the Plus program, but there are credit requirements for that federal loan program.

On the other hand, private lenders base the amount you can borrow on your ability to repay. They also look at your total cost of schooling. If your credit and income indicate you can pay off the debt, or if you have a cosigner who can, you might be able to borrow enough to cover your expenses.

What You Need to Qualify and How to Apply

To qualify for private student loans, you must show your ability to repay, usually through your credit score and income. If you can’t qualify on your own, consider finding a cosigner. When you’re ready to apply, prepare ahead of time.

Gather Your Personal Documentation

When applying for private student loans, you generally need the following information: - Name - Social Security number or citizenship status (permanent resident information) - Birth date - Contact information (email, address, phone number) - Proof of income, including tax returns, pay stubs and bank statements If you want a cosigner considered, they need to provide the same information. Some lenders send a link to the cosigner so they can fill out the application.

Provide School Information

Private lenders usually need upfront information about the school and your plans. So you might need to provide: - Name and contact information for potential schools - Your expected graduation date - Desired loan amount - Information about the cost of attendance - Other student aid you have received

Apply at the Student Loan Lender Website

You apply for federal student aid, including federal student loans, at Fafsa.gov. Most private lenders allow you to apply directly. After comparing three to five lenders, choose one and begin the application process. Depending on the lender, you may receive instant approval or need to wait a few days.

Both federal and private lenders usually disburse your money directly to the school. If funds are left over, the school passes them on to you. You can use the excess funds for school-related costs or return the money to reduce the total amount you borrow.

How to Maximize Federal Aid, Scholarships and Grants

Before deciding to move forward with private student loans, consider maximizing your federal student aid, as well as seeking private scholarships and grants.

Start by filling out the Fafsa, recommends Kat Tretina, a certified student loan counselor.

“Some grants are available on a first-come, first-served basis,” she says. “Also apply for outside grants and scholarships to reduce the need for student loans.”

Tretina points out that some schools and states also use information from the Fafsa to make decisions about student aid. Filling out the Fafsa can lead to need-based aid from your state or your school, and help you even after you reach the federal limit for aid.

Other actions you can take to reduce your need for student loans include: - Use Savings: If you have money saved up, including in a 529 plan, that can reduce the need for student loans. If a parent opens a 529 for a child, the owner of the account—and the assets in it—is the parent. This can be helpful in that those assets aren’t considered the student’s for financial aid purposes. - Work Part-Time: A job can help you offset some of the need for student loans. You can also apply for federal work-study, which is a form of student aid that guarantees you a set amount of money for working on campus. You must fill out the Fafsa to be eligible for federal work-study. - Apply for Several Private Scholarships: Many organizations offer scholarships for students. They are often relatively small, but a few of them can add up. Check with local stores, banks and service organizations like the Civitans or Rotary to see if they offer scholarships. You can also apply for larger scholarships with national organizations.

If you already have student loans, Tretina suggests taking steps to pay down the debt faster, including sticking to the standard repayment plan if you can afford it.

“Also, ask your employer if they'll help,” she recommends. “A larger percentage of employers offer student loan repayment benefits, so your employer may match your payments up to a set maximum each month.”

What Does the One Big Beautiful Bill Act Mean for New Borrowers?

For the most part, there won’t be major changes to how new undergraduate borrowers get federal student loans due to the One Big Beautiful Bill Act (OBBBA), or H.R. 1. Graduate and professional students are most likely to be impacted in the following ways: - Elimination of Graduate Plus Loans: After July 1, 2026, graduate students will no longer be able to apply for Plus loans. This might require more graduate and professional students to close a funding gap with private student loans. - New Limits on Graduate Loans: The new aggregate limit for graduate student loans will be $100,000 under the OBBBA. Professional students receive a higher limit of $50,000 a year and an aggregate limit of $200,000. - Parent Plus Borrowers Limited: Finally, Parent Plus borrowers will be limited to $65,000 in lifetime borrowing for a student, which means that some students might need to turn to private loans if federal loans aren’t enough to pay for college and their parents reach the limit for Plus borrowing.

FAQ

Can I apply for multiple loans, federal and private? You can apply for both federal and private student loans. It’s possible to be awarded both federal and private student loans simultaneously.

How does my credit score affect my eligibility for private student loans? The higher your credit score, the more likely you are to be approved for private student loans and receive the best advertised interest APR.

Are there any ways to save money on student loans? One of the best ways to save money on student loans is to reduce the amount you borrow. You can do this by applying for grants and scholarships, working while in school and using your savings. If you borrow, compare interest rates and fees to reduce the cost of borrowing. Finally, if you pay off your loans as quickly as possible after graduation, you can reduce how much you spend on debt.

What are the repayment options for private student loans? Many private student loan lenders offer repayment plans ranging from five to 20 years. They don’t normally offer income-driven repayment, although some provide access to hardship plans.