Best Private Student Loans of 2020: Reviewed & Independently Rated

Written by: Kristyn Pilgrim
Updated: 1/15/20

The best private student loans are those that offer favorable terms at a price you can afford. It might sound easy for students and parents to find a loan like that. In reality, you’ll need to do a little digging to ensure that you’re getting the right product to help you advance your education. 

We can help. 

In this article, we’ll help you understand:

  • How federal student loans differ from private loans. 
  • Which private loans might be right for you.
  • What the best private student loans tend to offer. 
  • How to find a loan that’s right for you. 

Federal Student Loans vs. Private Student Loans 

Two types of student loans exist. Federal versions are guaranteed by and administered by the government. Private options come from banks, credit unions, schools, and similar institutions. As a smart student loan shopper, you might consider both types of products in your financial aid mix. 

More than 90% of all student loans are federal. That makes sense, as federal loans come with many benefits, such as:

  • No credit checks. If you want to borrow for school but you’ve made poor financial choices in the past due to credit cards or some other issue, you can still get a federal loan.
  • Set costs. Government officials, not financial institutions, set loan interest rates. Those terms are the same for everyone. While some banks could charge you more if you have a poor credit history, federal officials cannot.
  • Favorable terms. You’re not required to start payments while you’re in school. If you struggle to make ends meet after graduation, forgiveness, forbearance, and repayment programs help you get back on track.
  • Savings. Federal loans tend to be less expensive than private versions.

Despite all these benefits, federal loans come with drawbacks. If you’re facing a hefty tuition bill, you may not be able to borrow enough to make ends meet. And if you shop around, you might find the best private student loans could save you money.

Best Private Student Loans 

We’ve looked through the contenders and read the reviews. There are solid choices for students hoping to add private student loans to their financial aid mix. 

We’ve found good options for:

  • Procrastinators. Like to do everything last minute? You may miss the deadline to apply for federal aid before classes begin. Citizens Bank can fill the gap. 

    Apply for a loan just once, and with multi-year approval, you’ll streamline the process for the following year. Fixed interest rates start at4.72%, and you can choose to pay back the balance in 5, 10, or 15 years. You must have good credit (so no prior student loan defaults), and you might need a cosigner.
  • Slow starters. Many private student loans come with immediate payment options. As soon as you graduate, you need to start paying. If you’re studying for a degree with a slow burn (like history), your job hunt might take longer.

    Commonbond offers a 6-month grace period, and if you have more trouble, you can apply for forbearance plans. Fixed interest rates start at 5.45%, and you can pay back the balance in 5, 10, or 15 years.
  • High achievers. Let’s say you’re hoping to use your degree to pull down a six-figure salary after graduation. Your advisors think this isn’t only possible, but probable. The best private student loans for you will take your earning potential into account.

    That’s what Earnest does. You’ll outline your career plans in your application, and you could see significant savings. Fixed interest rates start at 4.69% and there are no origination, prepayment, or disbursement fees. You can even skip a payment each year.
  • Returning students. Imagine that you’d like to go back to school, but your debt from the first go-round makes your dream impossible. Laurel Road may be a good option.

    This company offers refinancing options for student loans with a quick and easy approval process. Interest rates for a 20-year loan start at 5.05% for a fixed option. But you can choose to pay back the balance sooner and see your rates drop accordingly.
  • Smart shoppers. Shopping for the best private student loans can be frustrating, as your options are often limited. College Ave may be different.

    You can choose to pay your full principal right away while in school, pay just interest while in school, or pay a small amount (like $25) each month as you learn. You can also defer the whole thing and pay it when you graduate. Fixed interest rates start at 4.72%, which is remarkably low. 
  • Struggling students. What if your student loan could do more than make ends meet? A loan with Sallie Mae comes with four months of study and homework support for any subject. There’s no fee for this service. You’ll pay no origination fees, and there’s no penalty for paying your loan off early. Fixed interest rates start at 4.74%.

    Sallie Mae has been in the student loan industry for decades, so you’re working with a company that has little chance of going out of business.
  • Independent students. Many private student loan officers require cosigners. If you’re an older student and you don’t have anyone willing to take this step for you, consider Ascent.

    Full-time juniors, seniors, and graduate students can apply with no cosigner required. Pay back the loan in 10 or 15 years, and get some cash-back rewards when you’ve met certain terms and conditions. Fixed interest rates start at 4.02%.

What to Look for in Private Student Loan Lenders

There are plenty of options for student loans, but which one is right for you? And how can you tell? There are a few attributes that separate the good options from poor ones. 

The best private student loans offer:

  • Reasonable, fixed interest rates. A fixed rate loan gives you power. You’ll know how much you owe in interest every month, no matter what happens to the stock market. Variable loans come with interest rates ranging from one period to the next, and often, they cost you more. Private student loans often come with variable interest rates, so watch the fine print.
  • Few fees. Sneaky surcharges for sending you a check, printing out a bill, or processing a late fee can add up. Some private loans even come with application fees.
  • Favorable terms. When must you pay back the loan amounts? When do your payments start? Think about how much you’ll make after graduation (your counselor can help with that, as needed), and make sure you can stick to the obligations.
  • Open communication. If you can’t make your payments, either once or for an extended period, will the company work with you to find a solution? Or will you be pushed into default immediately? Is student loan refinancing an option? Lenders that offer assistance when you’re in trouble can help you keep your credit in good standing.

Most companies have slick, fancy websites that give you some information before pressing you to apply for a loan. Call first and understand the terms before you do so. 

If you think you’ve found the best private loan for you, follow some advice from Sally Mae:

  • Read the fine print. Don’t sign anything until you understand everything written in your loan documents, including rates, terms, and footnotes.
  • Ask about a cosigner. If you don’t have someone on the application already, you could be missing out on favorable loan terms. Ask how that addition could change your loan.
  • Shop around. Don’t act on the first deal you find. Get several options and look them over side by side.
  • Get help. Ask someone to help you make the right decision. Your school’s loan officer, your guidance counselor, or your parent can talk through your options and help you make the right decision. 

Taking out a loan is a big move, and it’s not one you want to take without careful consideration and deliberation. Don’t feel rushed or pressured into anything you’re not ready for. Take your time, and you’ll find the best private student loan for you.