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If you're planning on going to college, you'll likely need to take out student loans to pay for it. According to the College Board, a year at a public university for an in-state student costs $9,410, on average. Opt for a private school, and that number jumps to $32,410.
It's best to exhaust all of your federal student loan options before even considering private student loans.
Federal aid may not be enough to cover the total cost of attendance. In that situation, taking out private student loans can help fill the gap.
But which lenders offer the lowest rates and the most robust benefits? We've compiled a list of the best private student loan lenders available today to help you find the best option for you.
- Rhode Island Student Loan Authority: Best Overall
- Discover: Best Student Loan Interest Rate
- Citizens Bank: Best Student Loan Consolidation
- College Ave: Best Parent Student Loan
- Rhode Island Student Loan Authority: Best Student Loan Company
- SunTrust: Best for International Students
When looking for an undergraduate student loan, it's important to pay attention to interest rates, loan terms, and lender perks that can improve your borrower experience. With those factors in mind, the Rhode Island Student Loan Authority (RISLA) stands apart as the best overall lender.
Despite its name, residents from any state can qualify for a RISLA loan. However, applicants who live, work, or attend college in Rhode Island may be able to get a lower interest rate than other borrowers.
Unlike some other lenders, RISLA only offers fixed-rate loans. However, the fixed rate loans have fairly low interest rates. As of Jan. 10, 2020, the interest rate on a loan with Student Immediate Repay is 3.64%, while a Student Deferred Repay loan has a rate of 5.64% (both of these rates include an autopay discount).
As an undergraduate borrower, you have two main repayment options:
- Student Immediate Repay: With this option, you begin making payments 15 days after the final loan disbursement. You'll repay the loan over 120 months, and you'll get the lowest possible interest rate.
- Student Deferred Repay: If you opt for Student Deferred Repay, you'll get a higher interest rate. However, you won't have to start making payments until six months after you leave school. You'll have 180 months to repay your loan.
While RISLA offers low interest rates and different repayment plans, what really sets the lender apart is the benefits it offers to borrowers:
- Income-Based Repayment: If you're facing a financial hardship and can't afford your payments, you may qualify for RISLA's Income-Based Repayment Plan. With this approach, your repayment term is extended to up to 25 years, and your payments are based on your income and family size.
- Loan Forgiveness for Interns: Students who complete an eligible internship can receive up to $2,000 in student loan forgiveness.
- Autopay Discount: Sign up for automatic payments and receive a 0.25% discount on your interest rate.
- Nursing Reward Program: If you are a resident of Rhode Island or attended a university based in the state and are a licensed registered nurse, you can qualify for a 0% interest rate for 48 months, helping you save money.
- Forbearance: In some cases, you may be able to temporarily postpone your payments if dealing with financial issues.
When applying for a private student loan, you can often choose between fixed and variable-rate loans. Fixed-rate loans have the same interest rate for the entire repayment term. By contrast, variable-rate loans often start off quite low. But over time, the interest rate can fluctuate along with market conditions.
If you're looking for the lowest possible interest rate, Discover has the lowest rate on variable loans, with rates ranging from 2.80% to 11.37% (both of these rates include an interest-only repayment discount and autopay discount).
If you'd prefer a fixed-rate loan, consider RISLA, which offers loans with rates as low as 3.64%.
Private student loan consolidation, also known as student loan refinancing, can be a smart way to reduce your interest rate and save money. If you want to refinance your debt, Citizens Bank is the top lender.
What makes it our choice? There's a few different factors that influenced our decision:
- Low Interest Rates: Variable rates range from 2.29% to 9.02%, while fixed rates range from 3.45% to 9.02% (both of these rates include Citizens Bank's 0.25% Automatic Payment discount and a 0.25% Loyalty discount).
- Repayment Terms: You can choose a repayment term of five, seven, 10, 15, or 20 years so you find a repayment term that works for you and your budget.
- Cosigner releases: After making 36 consecutive, on-time payments, a borrower can request a cosigner release, removing the cosigner from the loan.
- Eligibility: Most refinancing lenders require you to have graduated from college to qualify for a loan. Citizens Bank is one of the few that does not. If you have an associate's degree or no degree at all, you can be eligible for a loan if you make at least 12 qualifying payments after leaving school.
As a parent, you want what's best for your child. And that may mean helping them pay for their education by taking out a parent student loan.
College Ave offers 11 different repayment terms for parent student loans, ranging from five to 15 years in length. That flexibility allows you to choose a loan term that works for your budget.
College Ave allows parents to borrow between $1,000 and the total cost of attendance. As an added perk, the lender allows you to get up to $2,500 of the loan delivered directly to you, so you can manage purchasing books, dorm supplies, or a new computer for your child.
The lender also has low interest rates, with variable rates as low as 2.72% to 10.88%, and fixed rates as low as 4.64% to 12.01% (both rates include an autopay discount). College Ave has three different repayment plans, so you can decide which is best for you:
- Interest-Only Payment: While your child is in school, pay only the interest charges each month.
- Interest Plus Payment: Pay the monthly interest charges and whatever extra money you decide each month while your child is in school.
- Full Principal and Interest Payment: Start repaying the full payment—including the principal and interest—after the loan is disbursed.
Unlike most lenders, RISLA is a nonprofit organization. As such, it's able to offer low interest rates and extra benefits that most other lenders can't match.
Applicants can borrow $1,500 to $45,000 per year to pay for their undergraduate degrees. There are no application, origination, or prepayment penalties.
Beyond its loans, RISLA provides families with information on how to find financial aid, including federal loans, grants, and scholarships. It also has programs that reward students for completing internships, helping them prepare for careers after graduation.
In addition, RISLA has an outstanding reputation. It has an A+ rating with the Better Business Bureau, and an "excellent" ranking with over 1,800 reviews on TrustPilot.
Unfortunately, international students often struggle to find private student loans to pay for school. Of the lenders that will work with international students, SunTrust has the most competitive option.
SunTrust's Union Federal Private Student Loan available to international students as long as you have a cosigner who is a U.S. citizen or permanent resident. You can borrow $1,001 to $65,000 per year, with an aggregate limit of $150,000.
With the Union Federal Private Student Loan, variable interest rates range from 3.124% to 12.125% and fixed rates range from 4.299% to 13%. With Suntrust's rate discounts, you could reduce your rate by up to 0.75%—0.50% with autopay discounts (0.25% for autopay and an additional 0.25% if you autopay from a SunTrust account) and 0.25% with the on-time payment discount.
While international students will need a cosigner to qualify for the loan, SunTrust does offer cosigner releases. After making 36 on-time qualifying payments, you can apply to have the cosigner removed from the loan.
How to Qualify for Student Loans
Before considering private student loans, make sure you exhaust all of your federal student aid options. Fill out the Free Application for Federal Student Aid (FAFSA) as early as possible to ensure you get all the financial aid you're entitled to receive.
For undergraduate loans, federal student loans do not have minimum credit score or income requirements, making it an excellent choice if you don't have steady income or an established credit history.
If you use all of the available federal aid and still need help paying for school, you can shop around for the best private student loans. Each lender operates independently from one another, and they have their own credit and income requirements.
As a college student, you can improve your chances of qualifying for a loan—and getting a competitive interest rate—by adding a cosigner to your loan application. A cosigner is usually a friend or relative with good credit and reliable income who applies for the loan with you. If you can't keep up with the payments, the cosigner is responsible for them, instead.
How to Apply for Student Loans
If you need to apply for student loans, the process you’ll follow is dependent on the loan type.
Federal Student Loans
- Fill out the FAFSA: First, complete the FAFSA. While the federal deadline isn't until June, state and school deadlines can be much earlier. To give yourself the best chance of getting financial aid, submit the FAFSA as early as possible in the year.
- Complete the CSS Profile: Some schools use the CSS profile to determine who receives non-federal aid, such as institutional scholarships or grants. Complete the CSS profile early on in the year to increase your chances of winning an award.
- Review your offer letter: When colleges send you an acceptance letter, they will contain financial aid information, including federal student loans. The letter will include details on how to accept the offered financial aid.
Private Student Loans
With private student loans, the process is more straightforward. You can shop around with multiple lenders. Many companies will allow you to get a rate quote with just a soft credit inquiry, which has no impact on your credit score.
Once you find a lender and rate that works for you, you can submit your application. The lender will ask for details like:
- Your name
- Social Security number
- School name
- Employment information
- Rent or mortgage payments
If you have insufficient income or too low of a credit score, you can also add a cosigner to your application.
Once you submit the application, the lender will review your application and decide whether or not to issue you a loan. In most cases, you'll receive a decision within a couple of business days.
How Student Loan Interest Works
Unfortunately, how much you originally borrow in student loans is not how much you'll repay. Thanks to interest charges, your loan balance can grow over time. Interest can cause you to pay thousands more than you originally borrowed.
For federal subsidized loans, the government covers the cost of interest that accrues while you're in school and during the six-month period after you graduate. After that, you're responsible for all interest charges.
For federal unsubsidized and private student loans, interest starts accruing on your debt as soon as the loan is disbursed. Interest will continue to grow while you're in school and during your loan grace period—the time before you start having to make payments.
Making payments while you're still in school and during your grace period can reduce the total you'll repay over the length of your loan, helping you save money.
While there are repayment plans—such as income-driven repayment plans—that allow you to extend your repayment term, doing so can cause you to pay back more money in interest.
Choosing the Best Student Loan for You
When it comes to paying for college, it makes sense to start with federal student loans. They tend to offer lower interest rates and more generous repayment terms than private student loans, making them a more affordable option.
However, federal loans aren't always enough to cover the full cost of your education. If that's the case for you, private student loans can play an important role in helping you complete your degree. If you decide that a private loan is right for you, research different lenders to find the best loan for you.
Research for this article encompassed private student loan lenders of undergraduate private student loans (as well as companies that refinance student loans) narrowed down from national banks, credit unions, and lenders. The criteria for measuring each lender included all available APR ranges for these loans, fees charged, repayment plans and hardship options offered, and the inclusion of additional features such as cosigner release, the availability of a parent loan, and the ability to refinance.
Ultimately, the "best of" awarded the highest status to the lenders that are available nationwide that offered the lowest fixed APRs, the most comprehensive hardship programs, and the lowest number of fees.
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Rhode Island Student Loan Authority. "RISLA Student Loan FAQ." Accessed Jan. 10, 2020.
Rhode Island Student Loan Authority. "Undergraduate Student Loans." Accessed Jan. 11, 2020.
Rhode Island Student Loan Authority. "Income-Based Repayment." Accessed Jan. 10, 2020.
Rhode Island Student Loan Authority. "Rewards for College Interns." Accessed Jan. 10, 2020.
Rhode Island Student Loan Authority. "Nursing Rewards." Accessed Jan. 13, 2020.
Rhode Island Student Loan Authority. "Forbearance Application Checklist," Page 1. Accessed Jan. 13, 2020.
Discover. "Student loans with great rates." Accessed Jan. 13, 2020.
Citizen's Bank. "Student Loan Refinancing." Accessed Jan. 13, 2020.
College Ave Student Loans. "Parent Loan Possibilities." Accessed Jan. 13, 2020.
Better Business Bureau. "Rhode Island Student Loan Authority." Accessed Jan. 13, 2020.
Trustpilot. "RISLA." Accessed Jan. 13, 2020.
SunTrust. "Union Federal Private Student Loan." Accessed Jan. 13, 2020.