Private Student Loans
Loans from banks, credit unions, and online lenders — credit-based, with terms set by the lender, not the government.
Private student loans are educational loans issued by banks, credit unions, and online lenders rather than the federal government. Because they are credit-based products, the interest rates, repayment terms, and other conditions are determined by individual lenders according to their own policies. These loans are typically pursued by borrowers after they have exhausted federal student loan options, since federal loans are often available first. Borrowers should verify current terms and eligibility requirements directly with lenders and consult studentaid.gov for the most up-to-date information on all loan options.
Who it's for
Students (and often a cosigner) who need to borrow beyond what federal aid, scholarships, and grants cover. Private loans are credit-based: approval, interest rate, and terms depend on the borrower's (or cosigner's) credit. Federal Student Aid and the CFPB generally recommend exhausting federal aid first, because federal loans offer fixed rates and borrower protections that private loans may not.
How the interest rate is set
Private lenders set their own interest rates based on your (or your cosigner's) creditworthiness and market conditions. Rates may be fixed or variable, and a variable rate can rise over time. Because terms vary widely by lender and borrower, compare offers carefully — there is no single government-set rate.
How much you can borrow
Limits are set by the individual lender, often up to the school-certified cost of attendance minus other aid. Each lender has its own underwriting rules.
Key terms at a glance
| Loan type | Private (bank, credit union, or online lender) |
| Rate set by | The lender (based on credit) |
| Rate type | Fixed or variable (varies by lender) |
| Credit check | Required |
| Cosigner | Often required, especially for students with limited credit |
| Federal protections | Not included (no income-driven repayment, PSLF, etc.) |
Pros and cons
Potential advantages
- Can help fill a funding gap after you've used federal aid, scholarships, and grants.
- A strong credit profile (yours or a cosigner's) may secure a competitive rate for some borrowers.
- Some lenders offer features like a cosigner-release option after a period of on-time payments.
Things to watch
- Credit-based: borrowers with limited or poor credit may not qualify, or may pay higher rates, and often need a cosigner.
- Generally do NOT include federal protections such as income-driven repayment, broad deferment/forbearance rights, or loan forgiveness programs.
- Variable rates can rise over time, increasing what you repay.
- Terms vary widely by lender, so you have to read and compare carefully.
Sources: CFPB — Federal vs. Private Student Loans; CFPB — Student Loans; Federal Student Aid — Federal Student Loans. Federal loan details follow U.S. Federal Student Aid (studentaid.gov); always confirm current rates and limits there.
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Compare student loan & refinance options →Frequently asked questions
Should I use a private loan or a federal loan first?
Both Federal Student Aid and the CFPB generally recommend exhausting federal options first — grants, scholarships, work-study, and federal loans — before borrowing private loans. Federal loans have fixed rates and borrower protections (like income-driven repayment and forgiveness programs) that private loans usually don't offer.
Do I need a cosigner for a private student loan?
Often, yes — especially if you're a student with limited credit history. A cosigner with strong credit can improve your chances of approval and your rate, but the cosigner is also legally responsible for the debt.