Private student loans can be a lifesaver when it comes to paying for the high cost of education. Moreover, the best private student loans usually give you:
- low-interest rates,
- flexible repayment terms, and
- additional features like career counseling.
The best private student loans are beneficial for borrowers who:
- Have maxed out their federal student loans
- Are not eligible for federal student aid
- Have good credit scores
- Are searching for private student loans low interest rates
This guide will give you the best private student loans in October and vital points you need to know.
Let’s begin.
Note: Make sure you understand everything before signing any documents, like how private student loans companies work. That will ensure you don’t default on your student loans and derail your future.
1. What Are The Best Private Student Loans To Use?
We’ve compiled the seven best private student loans to consider. You can go through them and decide the best works for you. However, private student loans should be your last resort if you’re still searching for a way to finance your education.
You should investigate the best student loans options, like federal ones, before searching for the best private student loans.
1.1 Credible
It’s a good idea to shop for the best loan terms and interest rates before applying for a student loan. But of course, this process can be time-consuming and frustrating when you do it yourself.
But you can use a student loan marketplace to fast-track the process. That’s where Credible comes in.
Just fill out a simple form, and you can compare interest rates from different lenders in minutes. The good part is that the quote won’t damage your credit score, and you can view different repayment options.
You can apply online if you find the one that works for you. And Credible allows you to add a cosigner if you need to.
Credible is totally free.
They only get a compensation fee when they apply for a loan through a lender featured on its marketplace. You won’t get an extensive list of private loan lenders. But you’ll get the top lenders in the industry, like College Ave, Sallie Maie, and Ascent.
1.2 Ascent
Ascent is one of the best private student loans lenders in the U.S. They provide cosigner and non-consigner loans for graduates and undergraduates. You get competitive interest rates and affordable repayment terms, and they lend between $2,001 and $400,000.
The Ascent non-cosigned loan for juniors and seniors is a great option. And that’s because, unlike most private loan lenders, they consider factors beyond your credit score when determining your eligibility.
To qualify, you must:
- Be a junior or senior in college, enrolled full-time (or expecting to graduate within 9 months of the loan application’s completion). And attend a qualifying school for a degree program.
- Maintain a GPA of 2.9 or above.
- You must either be a U.S. citizen, a permanent U.S. resident, or a DACA recipient.
Ascent provides a minimum loan amount of $2,001 and allows for loan deferment throughout school and nine months afterward.
1.3 LendKey
LendKey is another best private student loans lender that offers exceptional student loan interest rates. They can offer these great rates because of their unique business model. In addition, LendKey’s online service makes it easy for you to get a loan.
However, community banks and credit unions fund the company, so they handle the loans themselves. The upside is that you’ll never know you have a loan from a small bank.
But the downside is that you have fewer options while still in school. For example, payment options while in school include a $25 interest-only or fixed payment each month. So it’s still low but not pain-free like a full deferment.
Also, LendKey doesn’t provide student loans to parents directly. But they don’t charge application or origination fees, and there’s no prepayment penalty for paying off your loans early.
1.4 College Ave
Parents, and students, both local and international, can get the best private student loans from College Ave. However, you must be registered in a qualifying school and show academic improvement to be eligible.
You don’t need to be enrolled full- or part-time to qualify.
College Ave takes care of all your college expenses in one lump sum and makes loan payments straight to the school. Furthermore, families can get up to $2,500 per student to assist with miscellaneous costs like travel and textbooks.
College Ave partners with Payce Rewards, a no-cost tool that helps students earn cash back on online and in-store purchases to pay off their student debt.
They have about 61,000 stores in the U.S., including DoorDash, CVS, and Walmart.
To qualify for College Ave’s private loan, you must:
- Have a social security number
- Be at least 16 years
- be meet the institution’s guidelines for satisfactory academic progress
- Be enrolled in an eligible U.S. school
College Ave offers a pre-approval process for private student loans that involves a soft credit check. Don’t worry; this pre-approval doesn’t affect your credit score.
1.5 Citizens Bank
Citizens Bank offers parent, student, and refinance loans. Parents get the best private student loans low interest rates of 3.40% for the variable APR and 3.96% for the fixed APR.
On top of the 0.25% discount you get for setting up automatic payments, you also get a 0.25% discount as a loyal customer. Also, new customers get a 0.25% discount when registering for automatic payments.
However, you don’t get a prequalification from Citizens Bank. But you can use their student loan calculator to determine your monthly payments before submitting an online application.
The Multi-Year Approval Qualification
Citizen Bank offers parents and students a “Multi-Year Approval” to get enough funding for their entire school career on their initial loan application.
You must, however, request funding each academic year. But you don’t need additional paperwork, or an intensive credit check to get the approval.
Here are the eligibility requirements:
- To qualify, you must be a U.S. citizen, a foreign student with a U.S. cosigner, or a permanent resident.
- Participate in a degree-granting program at the sophomore level or higher
- Get a cosigner or excellent credit score.
- You shouldn’t have had loan defaults in the past.
1.6 MPOWER Financing
The Best private student loans can be a lifesaver for paying for school. But international students have a tough time getting them without a U.S. citizen cosigner. That’s where MPOWER Financing comes in.
MPOWER Financing offers undergraduate and graduates student loans to international students. They also offer loans to:
- permanent residents,
- U.S. citizens, and
- ACA students studying at one of 350 recognized colleges and universities in Canada and the U.S.
If you need money but don’t have a cosigner, a good credit history, or collateral, MPOWER Financing may be an option.
Borrowing amounts for international undergraduates range from $2,000 to $25,000, with a maximum of $50,000. The APR for undergraduates is 14.98% (12.94% for graduate students).
But you can be eligible for a discount of up to 1.5% in a one-time payment, automatic payment, and graduation and employment discounts.
Loans for undergraduates and postgraduates have a 10-year repayment term, with interest-only payments due during your time in school. And a six-month grace period after loan repayment begins.
1.7 SoFi
SoFi helps parents and students pay for college by offering the best private student loans low interest rates, and numerous discounts. Furthermore, you don’t have to worry about late charges if you miss a monthly payment.
Below are some of SoFi’s private loan discounts:
- When you enroll in automatic payments, your interest rate will be reduced by 0.25%.
- You get a 0.125% interest reduction rate as a SoFi member, whether a borrower or cosigner.
- Cosigners with multiple undergraduate loan accounts receive a 0.25% interest rate discount as a family discount.
- When you (borrower or cosigner) take out a second loan, your interest rate is reduced by 0.125%.
In addition to access to the Member Rewards Program and the Unemployment Protection Program, members also receive individualized career guidance and assistance.
You must use SoFi’s app to manage your credit cards, banking accounts, investments, and loan payments. You can get redeemable points for using the app, which you can use to pay off your student loan debts. However, Ohio residents don’t qualify for some of the benefits.
Requirements you have to meet:
- You must be employed or get a cosigner.
- To qualify, you must be a U.S. citizen, a permanent resident, or a person with a valid
- Have attained legal adulthood in their current state of residence
- Participate in at least half-time degree-granting four-year program
- To finance your studies at a qualifying higher-learning institution
2. How To Effectively Use The Best Private Student Loans?
There are several ways to make use of the best private student loans. Let’s go through some of them:
2.1 Use The Best Private Student Loans If Your Expense Suddenly Change
Sometimes, you can’t predict what will happen in college. So it’s normal for you to need help to cover unexpected expenses. For example, your roommate may suddenly move out, and you may have to cover their part of the expenses.
So before considering credit cards, which come with enormous interest rates, consider the best private student loans.
Remember that your school will factor in non-tuition fees like room and board, transportation, and supplies when calculating the total cost of attendance. And you can use private student loans to pay for these costs.
2.2 The Best Private Student Loans Can Help You Fill A Funding Gap
When students’ federal financial aid doesn’t cover all their college costs, they turn to the best private student loans. For instance, there is a cap on federal loans; for many people, that limit isn’t even close to covering the full college cost.
Private student loans are an alternative for those who have already applied for and received all available federal student aid.
However, before proceeding, ensure you’ve done your research and that your higher education will pay off before taking on any debt.
3. How Much Are Private Student Loans In America?
As of August 2022, American borrowers, both federal and private student loans, owed almost $1.75 trillion.
The latest data from The Institute for College Access & Success shows that 62% of 2019 graduates finished with student debt. The typical debt carried by these graduates is $28,950.
According to MeasureOne, the best private student loans make up 7.789% of the remaining U.S. student loans.
In the 2020–2021 school year, private student loan debt reached an estimated $12 billion.
During the 2020-21 school year, 63% of graduate and 90% of undergraduate private loans were cosigned. In addition, about 53% of undergraduates take out private loans before they’ve used up all their federal aid.
In 2019, private loans comprised 16% of all student aid given to graduating students. And the interest rates for cosigned private loans averaged 10.20% in the same year.
4. Who Is Eligible For A Private Student Loan?
Private loan lenders are particularly cautious about who they give their money to. But anybody can qualify for the best private student loans if they meet the requirements.
Each private loan company has its requirements, but some requirements are general.
Let’s go through them:
4.1 Credit History And Credit Score
There is no standard credit score you need to be eligible for. However, you must have a better credit score to get approved. And that’s because a good credit score can help you get a better interest rate.
If you have a low credit score, apply with a cosigner. But before you apply, check your credit report to see if you can do something to improve the score.
4.2 Check Your Debt And Income
Having any income at all is preferable, but it is not required. Debt-to-income ratio is another factor that lenders may consider. Here, monthly debt payments are compared to monthly income. The better loans you can get with a lower DTI.
A source of income can help you qualify for the best private student loans, and you don’t need to earn much. The lenders will also take a look at your debt-to-income ratio. The DTI compares your monthly loan payments to your income each month.
If your DTI is low, you can get better loans.
4.3 Enroll In A Qualifying Program
Your lender may contact your school to confirm your enrolment in a qualifying program before authorizing your loan. They might even ensure you aren’t taking out more money than you need for school.
You also may have to enroll full-time to be eligible for a private student loan. Some lenders don’t approve every degree program and college. So before you sign up for any private loan, check their eligibility requirements before making the final decision.
Private loan requirements can be stricter than federal loan terms. So be prepared before making a move.
5. How Much In Private Student Loans Can I Get?
Each private loan lender determines how much money you can borrow. In other words, the amount you can get for the best private student loans varies.
For example, Citizens Bank can give you 100% of the cost of attendance if you qualify. On the other hand, Ascent offers an annual limit of $20,000 for non-consigners and $200,000 for cosigned loans.
But there are certain things private lenders look at to decide your student loan amount. Let’s go through them:
5.1 Lenders Guidelines Or Limits
Every lender or bank has its annual borrowing limits. Others have a specific cap for yearly amount borrowing. For example, MPOWER Financing offers an annual limit of $25,000 for each loan.
5.2 Cost Of Attendance
Most private lenders determine the amount of loan you can get from them based on your cost of attendance. Many private lenders will cover all of your costs of attendance. But only a few will let you borrow more than the actual amount that your program costs.
5.3 Credit Qualifications
Lenders may cap student loan amounts according to your creditworthiness. For example, you’ll need to show your creditworthiness to qualify for a private student loan. If you don’t have a good credit history, you might need a cosigner to secure the loans on your behalf.
5.4 Employment And Education
Private lenders can decide the loan amount limit on what they think will be affordable. They check specific details like your cosigner’s income or the degree you’re pursuing to determine if you can afford the amount.
6. Which Is Better: Federal Student Loan Or A Private Loan?
The Best private student loans have increased in popularity, although federal loans still dominate the student loans sector. Federal loans don’t depend on your credit history, and the U.S. Education Department funds them.
But private loans are credit-based alternatives made available by banks and other private lenders.
The most cost-effective and convenient borrowing option is federal student loans. However, you can still use private loans to fill the gap when you reach your federal borrowing limit. They can also be a cheaper alternative to federal direct PLUS loan terms.
Private student loans can include, depending on the lender:
- Options for international students,
- No origination fees,
- Funding above the federal loan limits, and
- Better interest rates
But you’ll need good credit or a cosigner with good credit to qualify for the best rates and terms on private loans. And you won’t qualify for the PSLF program, so your repayment options will be limited.
7. Which Bank Is Best For Student Loans?
The best bank to get your private loans will depend on several factors, such as cost, fees, loan terms, interest rates, etc. For example, banks like Ascent excel in offering international student loans.
So if you’re an international student, you can get a loan if you meet the requirements. LendKey is ideal for borrowers who prefer to work with institutions, not big banks.
If you want to refinance your loans, SoFi can be an ideal option. So choose the bank depending on what you want.
8. Where Is The Best Place To Get Student Loans?
There’s no one-size-fits-all answer to this question. The answer will depend on what rates, loan terms, eligibility requirements, etc., works for you. Here are some points to note before which bank works best for you:
8.1 Check The Products They Offer
Know how much you want to borrow and the type of loan you need. Then compare the products these different lenders offer to determine your needs. Finally, you can narrow it down by comparing each lender’s maximum amounts and loan terms.
Check with each potential lender to see if they provide funding for your intended field of study.
8.2 Additional Benefits Or Features
The best private student loan terms and conditions may differ from one lender to the next. However, some advantages may facilitate repayment, reduce your interest rate, or assist you in finding the most suitable lender.
Some of the benefits or features some lenders offer can:
- make repayment easy,
- reduce the interest rate, or
- help you find the right lender for your current situation.
8.3 Eligibility Requirements
Find out lenders’ criteria to decide who can borrow money from them. For example, credit history, age, enrollment status, income, and citizenship.
8.4 Check The Costs
Your private loan costs will depend on several factors. To determine how much you’ll spend on interest, find out how much you’ll be charged in fees.
Late fees and application or origination costs are common among lenders. Therefore, you should always check the loan terms to find potential costs. However, not all lenders charge these fees.
Unpaid interest is capitalized or added to the principle of your student loan, but it’s not a fee. The final amount you pay for your loan will be affected by the timing and manner in which interest is capitalized.
9. Is It Easy To Get A Private Student Loan?
Private lenders have different eligibility requirements like income and credit scores. That makes it challenging to qualify for the best private student loans compared to federal loans. Usually, you’ll need a good credit score or someone with a good credit score to cosign for you.
But private loans give you room to customize more than federal student loans. For example, you can choose between variable and fixed interest rates. And you can usually choose between different repayment durations.
If you have an excellent score, you can get private student loans low interest rates.
10. Will Private Student Loans Be Forgiven?
Unlike federal student loans, no nationwide programs can cancel out private debt. When it comes to the best private student loans, however, numerous local organizations can help with the repayment process.
You can qualify for these programs based on your occupation and location.
Depending on the situation, you may be able to negotiate with your lender for a reduction or cancellation of your interest rate. In exchange, you’ll work in a disadvantaged area or field.
11. Conclusion
It’s better to max out your federal student loans before considering the best private student loans. That will help you access loan forgiveness programs, IDR plans, forbearance, or deferment.
Private student loans are an option if you still need financial aid to support your educational costs. However, remember that the more money you borrow now, the more you’ll have to pay back once you’ve finished school.
Consider private student loans when
- You don’t qualify for federal student loans,
- your expenses change suddenly,
- You have a plan to pay back the money you borrowed in a short amount of time.
12. FAQs
12.1 Which private student loans companies are available in 2022?
There are numerous private student loans companies available in October to check out. Some of them are Sallie Mae, Ascent, Credible, MPOWER Financing, and College Ave.
However, the best private student loans companies for you will determine your current situation. So find an expert to help you choose the right private lender.
12.2 What are the best private loans for college?
Some of the best private loans for college include Citizens Bank, which you can apply for no origination or service fee. And you can apply with or without a cosigner. Other best private loans for college to check out include SoFi, Discover, and LendKey.
12.3 What are the best student loans options that I have?
If you’ve hit the maximum on your federal loans, the best student loans options are private loans. However, before you take that road, you’ll lose some perks like loan forgiveness, especially if you decide to refinance your federal loans. So do your research before proceeding.
12.4 How to find private student loans low interest rates?
There are several ways to get the best private student loans low interest rates. One sure way is to get an excellent credit score or cosign with someone with a good credit score. That will help you get low interest rates. Another option is to refinance your student loans. But if you refinance your federal loans, you’ll lose all the protections and repayment options that come with it.
