College prices continue to rise faster than financial aid, leaving students to borrow more than just federal student loans for college. Thankfully, it’s easy to find private lenders granting low-interest student loans to undergraduate students, graduate students, and even parents.
Low-Interest Student Loans
We’ve curated a list of the best private student loan lenders out there. These lenders all offer competitive low-interest private student loans. Each one has scored highly when evaluated using rigorous rating criteria too.
Earnest offers private student loans to students with or without a cosigner. Other perks include a generous nine-month grace period, a 0.25% auto pay discount, and no fees for origination, disbursement, prepayment, or late payment.
LendKey works with several credit unions and banks to find a private student loan solution for you. Use a LendKey loan to fund your undergraduate or graduate degree. You never have to pay any origination fees or prepayment fees and receive a 0.25% interest rate reduction for choosing autopay.
CommonBond provides private student loans for undergraduate and graduate students who have a cosigner and for MBA, dental, and medical school students without a cosigner. They never charge any application fees, origination fees, or prepayment fees. Undergraduate students get paired with a money mentor who will help you manage your budget, find internships, and more. Starting interest rates vary based on your intended degree level.
CollegeAve provides parents, undergraduate students, and graduate students with private student loans. College Ave offer students a variety of repayment methods and flexible loan terms, so you can keep monthly payments manageable or save on total interest. Interest rates vary based on your degree level.
Turn to SoFi if you’re in need of a low-interest private student loan with flexible repayment options. Defer payments until six months after you leave school, pay only interest while you’re in school, pay $25 per month while you’re in school, or start making full monthly payments right away. Add a cosigner with stellar credit to snag their best rates.
| Lender | Variable Rates (APR) | Fixed Rates (APR) | |
|---|---|---|---|
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1.04% - 11.98% |
3.34% - 12.99% |
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1.05% - 11.44% |
3.49% - 12.78% |
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1.78% - 11.56% |
5.17% - 14.96% |
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3.52% - 9.50% |
5.45% - 9.74% |
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5.50% - 13.91% |
3.69% - 14.26% |
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How to Get a Low-Interest Student Loan
Getting a low-interest private student loan requires a little more work than just getting a federal student loan. There are a few steps you’ll need to follow if you want to get approved for a low-interest rate.
Complete Your FAFSA to Determine How Much You Need to Borrow
Before you can take out a private student loan, you need to know how much to borrow. File your FAFSA to see what scholarships and federal grants you’re eligible for and to see what amount isn’t covered by federal student aid. Private student loans should only be used to cover the remaining costs after taking federal funding and free money for college into account.
All the lenders we work with let you borrow up to the cost of attendance (COA). However, you may not need to borrow that much. Along with tuition, room, and board, the cost of attendance includes estimated costs like books, supplies, and transportation. Those estimated costs are often inflated, adding a few thousand unnecessary dollars to the COA. It’s best to use savings or part-time job income to cover those smaller costs.
Build Your Credit Before Applying
Before applying for a low-interest student loan, build or improve your credit. This looks different for everyone and is most important for students planning to take out a loan without a cosigner. If you already have credit, read our Top Seven Tips on How to Improve Credit Score in 30 Days. Try out a few of the techniques to give your credit score a boost before filling out any applications. If you don’t have any credit, you can establish credit in about six months.
Consider Adding a Cosigner
Creditworthy cosigners boost your chances of securing the lowest possible interest rate. When you add a cosigner, the person is agreeing to be legally responsible for the debt. The lender considers their income and credit score during the application phase, which is helpful if you have poor or no credit. LendKey, CommonBond, Earnest, College Ave, and SoFi all allow you to add a cosigner.
If you add a cosigner, keep them in the loop while you’re searching for a lender. Your cosigner might be more open to a lender that offers cosigner release after a set number of on-time payments.
What Credit Score Do You Need to Get a Low-Interest Student Loan?
You need a good credit score of at least 650 to qualify as a sole borrower for a private student loan. To qualify for the lowest interest rates, you’ll need a score of 720 or higher. No clue what your credit score is? Check your credit score for free up three times per year. The three major credit reporting agencies, TransUnion, Experian, and Equifax are required to give you a free report every 12 months.
If your score isn’t as high as it needs to be, add a cosigner to your loan whose is. Even if you have a decent credit score, it never hurts to add a creditworthy cosigner. The higher the credit score on your loan application, the higher the likelihood that you’ll qualify for the lowest advertised rates.
Keep in mind that all lenders use their own eligibility criteria when evaluating loan applications. If you’re unsure about whether you qualify for a specific lender, you can always apply for a rate and see what happens. Just make sure they only run a soft inquiry on your credit. A hard inquiry could just lower your score.
Alternatives to Borrowing if You Can’t Get a Private Student Loan
Borrowers who don’t qualify for low-interest private student loans still have options. You may just need to adjust your college or part-time job plans a little bit.
Applying for Grants and Scholarships
All students should exhaust grant and scholarship options before taking out any loans for college, but it’s especially important for students who can’t get approved for a private student loan. You won’t have to pay that money back, so it’s essentially “free” money for school. Read our article on The Best Ways to Get Free Money for College to get started.
Studying at a Less Expensive School
If you choose a less expensive school—like an in-state public university or community college, you may not need any private student loans at all. Choosing a school close to home to eliminate room and board costs is another option too.
Working While You’re in School
Instead of taking out a loan to cover the cost of your housing, food, and books during the semester, take up a part-time job. Some colleges offer work-study positions on campus or you can find a business near campus looking for part-time workers. There are a lot of good jobs for college students out there.
Finding a Job Offering Tuition Assistance
Some employers, like Chipotle and Starbucks, have tuition assistance programs. As long as you remain an employee, the company will help cover some of your educational costs. Students pursuing a master’s degree have even more options. It’s not uncommon for a company to agree to pay for your master’s degree in exchange for a work commitment upon your graduation.
