The best private student loans of 2021

By Liz Knueven

Rates in this post are current as of 01/14/2021.

If you've used all savings available to pay for college, all available federal student loans, and all student aid and still find that you're short on cash, a private student loan could be a good option. 

Federal student loans should always come before private student loans — federal student loans have the lowest interest rates and also come with a level of protection that private lenders don't offer.

Take the federal student loan forbearance during the coronavirus pandemic, for example. While private lenders may have offered their own help for people experiencing hardships, private student loan borrowers didn't get that widespread benefit, nor have interest rates set to 0% to stop interest accrual. 

The best student loans available are federal student loans. But, if you need to turn to a private lender, here are a few of the best to start your search.

Pros:

  • Graduate student loans start lower than undergraduate loans, which is rare
  • Lowest maximum interest rates for undergraduates, capping at 11.66%
  • No fees

Cons:

  • Higher minimum loan than others, minimum of $5,000

SoFi's private student loans are best for graduate students. SoFi is one of the few lenders that offers lower interest rates for graduate school loans than undergraduate loans, with graduate loans starting 0.1% lower than undergraduate loans. 

While SoFi's interest rates are competitive with others on the list, what makes SoFi unique are its other features. This lender offers some good protections for student loan borrowers, like career services and unemployment protection. Additionally, SoFi's student loans have no fees, including no late fees (though it's worth noting that interest will still accrue).

However, SoFi's minimum loan amount is $5,000 — if you need a small student loan, it might be worth turning to a lender that makes smaller loans. 

Undergraduate fixed interest rate range: 4.23% to 11.26%, including autopay discount 

Loan amounts available: $5,000 minimum, up to 100% cost of attendance

Repayment options available: Four

      • Deferred: No payments until six months after leaving school
      • Interest only: Only make payments on the loan's interest while in school
      • Partial payments: Pay $25 per month while in school
      • Full repayment immediately: Start making full payments while still in school

Pros: 

  • Cosigner release available after 24 months of on-time payments

  • Up to a nine-month grace period

Cons:

  • No repayment option while in school

Ascent private student loans are a flexible option for almost any student loan borrowers. Interest rates are competitive, and terms range from five to 15 years. 

Like all other student loan lenders on this list, cosigners are allowed, and encouraged. But, a relatively unique feature is Ascent's cosigner release. Make 24 consecutive on-time payments, and Ascent can release a cosigner from your student loan. 

Ascent isn't a great option if you want to repay your student loans while you're still in school, as this lender doesn't offer a repayment plan with full payments while borrowers are still enrolled. But there's no prepayment penalty on loans if you want to make partial payments in school. It's also worth noting that Ascent limits borrowers' total loans to $200,000, including any other federal or private student loans outside of Ascent. 

Undergraduate fixed interest rate range: 3.14% to 13.31%, including autopay discount 

Loan amounts available: $1,000 minimum, up to 100% cost of attendance

Repayment options available: Three

  • Deferred: No payments for up to nine months after leaving school
  • Interest only: Only make payments on the loan's interest while in school
  • Partial payments: Pay $25 per month while in school

PFI Best Earnest logo Banner
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Pros:

  • Nine-month deferral after school

  • No fees

Cons:

  • An option to skip one payment per year could result in higher loan balances and longer payoff

Earnest's private student loans offer low starting interest rates and very flexible repayment terms. Earnest has four options for repayment, including a nine-month deferral after school. Earnest doesn't charge any fees, including prepayment or origination fees on private student loans, which makes it a strong option. 

However, some of Earnest's flexible features can be too flexible. The ability to delay loans for nine months may not be as great as it sounds, since interest still accrues during this period, growing your loan's balance.

Earnest also advertises the ability to skip a payment once per year. But that doesn't meant that you're off the hook for that payment, since interest will still add up and your payoff will be delayed. Your payments could be higher if you take full advantage of these features, and they could increase your total payoff time and loan amount. 

But, if used the right way, Earnest's private student loans could still beat the competition with such low starting interest rates.

Undergraduate fixed interest rate range: Starting at 3.49%, including autopay (Earnest doesn't list a maximum interest rate)

Loan amounts available: $1,000 minimum, up to 100% cost of attendance

Repayment options available: Four

  • Deferred: No payments for up to nine months after leaving school
  • Interest only: Only make payments on the loan's interest while in school
  • Partial payments: Pay $25 per month while in school
  • Full repayment immediately: Start making full payments while still in school

Pros: 

  • Low interest rates on both graduate and undergraduate loans

  • Flexible repayment options

Cons:

  • Interest rates could be higher than SoFi's

College Ave ties with Earnest for the lowest starting interest rates on private student loans, since undergraduate fixed-rate loans start with an interest rate of 3.49%. Interest rates for grad school students are also competitive with SoFi's lower interest rates for this group. 

It's a good choice for both graduate and undergraduate students, and offers four options for repayment. It allows cosigners for loans, and offers parent loans in addition to undergraduate and graduate loans, starting at the same interest rate as the undergraduate interest rate. 

Undergraduate fixed interest rate range: 3.49% to 12.99% 

Loan amounts available: $1,000 minimum, up to 100% cost of attendance

Repayment options available: Four

  • Deferred: No payments until six months after leaving school
  • Interest only: Only make payments on the loan's interest while in school
  • Partial payments: Pay $25 per month while in school
  • Full repayment immediately: Start making full payments while still in school

Citizens Bank private student loans

Citizens Bank offers good rates, but there are fewer repayment options through this lender, as Citizens doesn't give the option to pay during school. 

Commonbond private student loans

Commondbond offers good rates, but you're required to have a cosigner on most student loans.

Credible private student loans

Credible doesn't directly make student loans — rather, this is a marketplace that makes loans through the lenders listed above and more. Credible works with Ascent, Citizens Bank, College Ave, and Sallie Mae, for example. 

Discover private student loans

Some of Discover's rates are competitive, but graduate students in particular can find better loan rates elsewhere.

Sallie Mae private student loans

Sallie Mae's undergraduate fixed interest rates start at 4.25%, which is just slightly higher than SoFi's starting point. This lender's graduate school loans are significantly higher than other lenders' graduate program loan options, starting at 4.75%.

Wells Fargo private student loans

Wells Fargo's private student loan rates are higher than what's offered by competing lenders. 

How did we pick the best private student loans? 

Personal Finance Insider's goal is to help smart people make the best possible decisions with their money. To do that, we combed through many student loans, comparing interest rates, terms, and fine print so you don't have to. We looked for several factors in determining the best student loans, including: 

      • Interest rates: The lower the interest rate the better, and we prioritized lenders with the lowest interest rates for both grad school and undergrad students.
      • Nationwide availability: We searched for student loans available in all or most US states. 
      • Flexibility of repayment plans: There are four main options for repayment offered by most lenders: defer payments until after school; interest-only payments in school; small, fixed payments in school; and full monthly in-school payments. We looked for lenders with the most ways to pay.
      • No or few fees: We prioritized lenders that didn't charge fees, like origination fees or prepayment penalties.
      • Cosigner eligibility: All of the student loans we considered had the option to apply with a cosigner, to help with chances for approval and lower interest rates. Several our top picks also have the ability to release a cosigner —Ascent and College Ave both offer this after 24 months of consecutive, on-time payments. 

What's the difference between federal and private student loans? 

Federal student loans have a number of protections that private student loans don't, and often come with lower interest rates, too. 

While the lowest fixed interest rate on our list of private student lenders is 3.14% for an undergraduate degree, the interest rate for the same loan would be 2.75% through a federal lender. 

Additionally, federal student loans have more protections. The widespread forbearance and 0% interest rates during the coronavirus pandemic are some examples. Similarly, income-based repayment plans are only available for federal student loans, and help to lower payments to a percentage of a person's income. That's a protection not available to private student loan borrowers that could make a big difference. 

It's a good idea to use all of your available federal loan options first to take advantage of these protections.

Can you get a student loan without a cosigner? 

For most younger students, it's unlikely you'll be approved without a cosigner. Only 8.8% of people who applied for private student loans without a cosigner were approved in 2020, according to LendEDU data. And the average credit score for approval was 748. 

It is possible, but mainly for students that have an established credit history and an income. Once you have some credit established, however, you may be able to remove your cosigner by refinancing. Some lenders also allow borrowers to remove cosigners after several years of consecutive payments. 

Variable interest rate student loan vs. fixed-rate student loans — which is best?

Interest rates are at record lows in 2021, dropping across the board for both fixed- and variable-rate loans. And variable interest rates are exactly what they sound like — these loans have interest rates that change based on interest rate indexes, like the LIBOR or prime rate, plus a margin. When that index rate increases, the amount of interest you owe increases, along with your payment. 

On variable-rate loans, interest rates and payments change over time. So, it's important to remember that what goes up must come down, and vice versa. There's a chance that interest rates will increase before a long loan (like a student loan) is paid off, and your interest rate and payment may not always be as low as it is now.