Best Private Student Loans Of 2025
Summary: Best Student Loans Of 2025
Current Average Student Loan Interest Rates
Private student loan lenders typically set interest rates using a benchmark like the Secured Overnight Financing Rate (SOFR). The SOFR tends to align with the federal funds rate set by the Federal Reserve.
Below are average rates for 10-year fixed-rate loans and 5-year variable-rate loans.
Note that several factors determine your rate, including income and credit history. Typically, you’ll receive a lower rate with a higher credit score and sufficient income.
Student Loan Interest Rate Trends
How Do Student Loans Work?
Student loans can be used to pay for many school-related expenses, including tuition, room and board, books and school supplies, transportation and other common expenses.
Once your loan application is approved, the funds are disbursed to the school to cover your balance. You can often defer repayment until after leaving school, but interest may start accruing immediately.
Federal vs. Private Student Loans
Student loans are either federal or private loans. Below, we break down some of the key differences between the two loan types.
Many borrowers consider federal student loans first due to the protections and forgiveness programs. However, after you’ve exhausted options like scholarships and grants, along with federal aid, private student loans can help to fill any financial gaps.
What must borrowers consider when choosing between federal and private student loans?
Pros and Cons of Private Student Loans
Borrowing a private student loan has its advantages, but there are also potential downsides. Consider these pros and cons before you apply.
Pros
- Fills in the gaps when you’ve maxed out financial aid. You can use private student loans to pay for tuition, fees, supplies, groceries, rent or other costs.
- May be able to borrow up to your school’s full cost of attendance. By contrast, some federal student loans come with borrowing limits.
- Low interest rates may be available for excellent credit. Creditworthy applicants may access low fixed and variable interest rates.
- Provides funding for international students. International students aren’t eligible for federal student loans or financial aid but can qualify for a private student loan.
Cons
- May require a co-signer. Most undergraduates have to apply with a co-signer, such as a parent, to get approved for a loan.
- Interest rates could be high. Interest rates may exceed 17%, resulting in high borrowing costs.
- Not as many protections as federal student loans. Federal student loans are eligible for various benefits, including income-driven repayment, deferment and forbearance. Private student loans may or may not come with these protections.
- Don’t qualify for federal loan forgiveness. Private student loans aren’t eligible for federal forgiveness programs, such as Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness or the loan forgiveness you can receive at the end of an IDR plan.
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How Much Will a Student Loan Cost You Up Front?
Some lenders charge origination fees to process your loan. This is typically a percentage of your loan amount that’s subtracted from what you borrow.
These fees vary widely with private lenders, and some lenders don’t charge them at all.
All federal student loans, on the other hand, charge an origination fee. For loans disbursed before October 1, 2025, the fees are 1.057% for direct subsidized and unsubsidized loans, and 4.228% for parent and graduate PLUS loans.
We asked Andrew Paulson, co-founder of StudentLoanAdvice.com and Forbes Advisor advisory board member, what borrowers should consider about fees when choosing a lender.
When considering private student loans, most lenders don’t charge origination fees. However, certain specialty loans, such as those for medical, dental or MBA programs, may include additional fees. If the private lender you’re working with charges an origination fee, it may be worth exploring other lenders for better options.
– Andrew Paulson, Forbes Advisor advisory board member
Other Student Loan Fees To Consider
Once you begin repaying your student loans, you may run into other costs, such as a late payment fee if you don’t make on-time payments.
On a positive note, student loan lenders and servicers are prohibited by federal law from charging a penalty fee if you make extra payments or if you pay off your student loans early.
Here’s a glance at the fees lenders charge from our list.
Tips for Comparing Private Student Loans
Do your due diligence as you prepare to borrow a private student loan. Experts recommend borrowing no more than what you’ll most likely earn in your first year out of college. This can protect you from having unmanageable monthly payments after you leave school.
When you review each lender and loan, consider the following factors:
Loan Amount
Loan Cost
Repayment Term
Borrower Benefits
Co-signer Release
Pro Tip
Compare offers from multiple private student loan lenders to find the most competitive interest rates, fees and repayment options. Different lenders may have varying loan terms and borrower benefits.
How To Get a Private Student Loan
Consider private loans if you’ve reached the annual or aggregate limits for federal student loans and need to borrow additional funds.
The private student loan application process can take several weeks or even months, so most lenders recommend applying at least two months before your tuition due date. Here’s how to apply for a private student loan:
1. Review your credit
2. Consider a co-signer
3. Gather supporting documents
4. Compare lenders
5. Choose an offer and apply
6. Sign your loan agreement
Pro Tip
To get the best student loan interest rate, improve your credit score before applying or use a co-signer with a longer credit history and higher credit score. Many younger student borrowers have shorter credit histories and less diverse credit mixes than older adults, so most private student loans are co-signed.
If you’re a parent planning ahead for college costs and know you’ll be considering student loans, adding your child as an authorized user to a credit card will help improve their credit score. In the end, this can lead to them receiving lower interest rates.
Methodology
We scored 16 national lenders that make the most loans by volume across 15 data points in the categories of interest rates, fees, loan terms, hardship options, application process and eligibility. We chose the best lenders based on the weighting assigned to each category:
- Hardship options. 20%
- Interest rates. 20%
- Fees. 15%
- Application process. 15%
- Loan terms. 10%
- Eligibility. 10%
- Customer service. 10%
Specific characteristics taken into consideration within each category included number of months of forbearance available, economic hardship repayment options available beyond traditional forbearance, perks like cash-back rewards upon graduation, discounts, time to default, disclosure of credit score and income requirements and other factors.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Student Loans Rating & Review Methodology.
Frequently Asked Questions (FAQs)
Can I get a student loan without a co-signer?
It’s possible to get a student loan without a co-signer, but the difficulty of doing so depends on your situation.
Nearly every type of federal student loan does not require (or allow) co-signers. Because you don’t need a high credit score to qualify for these types of loans, most students are eligible without a co-signer if they can meet a few basic requirements.
Private student loans, however, may be harder to get on your own. These types of loans require a high credit score of at least 670 to qualify for the lowest rates. If you can’t qualify individually, you may need to add a co-signer to your application. However, some lenders offer a co-signer release after you meet certain requirements, so look for that feature as you compare your options.
Some private lenders specialize in student loans without a co-signer; instead of reviewing your credit, they may consider things like your performance in school and field of study instead. While it may be easier to qualify for these loans, they typically come with higher interest rates.
How much money can I borrow through private student loans?
The maximum amount you can borrow varies by lender. Some lenders allow you to borrow up to 100% of the school-certified cost of attendance—which considers tuition, fees, textbooks and room and board—while others have caps of $50,000 per year.
How long does it take to get a private student loan?
The amount of time it takes to get a private student loan will vary by lender, but expect it to take one to three weeks to receive your funds. Along with processing your application, the private lender will likely reach out to your school to confirm your cost of attendance. The lender may send your loan funds directly to your financial aid office, which will apply them to tuition and fees before sending the remaining funds over to you.
Do private student loans allow deferment or forbearance?
Some private student loans allow you to defer your loan payments while you are attending school, but interest still accrues on these loans. Some lenders may offer deferment for a financial hardship or during military deployment. Forbearance also lets you suspend payments for a certain period of time.
Regardless of whether payments are suspended payments through deferment or forbearance, the unpaid interest gets added to your principal, causing your monthly payments to increase once repayment begins again.
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