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.
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.
Compare the Best Student Loan Refinance Rates
Here are our top student loan refinance picks for 2019
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation. This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 5/18/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.