Page Text: (unless applying for a PLUS loan with adverse credit)
No
(but might increase chances of qualifying)
Requires credit check
Only for PLUS loans
Yes
*Federal student loan interest rates apply to loans disbursed on or after July 1, 2021, and before July 1, 2022.
Private college student loans
Private student loans are offered by private companies that decide their own rates and terms. To take out a private student loan, you’ll have to undergo a credit check, which is used by the lender to determine your creditworthiness as well as your rate.
Keep in mind that private student loans generally don’t provide the same protections as federal student loans. However, they do offer some perks of their own, such as:
Higher loan amounts: Some lenders allow you to borrow up to your school’s cost of attendance.
No application deadlines: You can apply for a private student loan at any time.
Federal student loans
Federal student loans are offered by the federal government and have their rates set by Congress. To apply for these loans, you’ll need to fill out the FAFSA. Unlike private student loans, most federal student loans don’t require a credit check.
If you need to borrow for school, it’s usually a good idea to start with federal student loans. This is mainly because they offer federal benefits and protections, including access to:
Income-driven repayment plans: These plans base your payments on your income.
Student loan forgiveness programs: Most of these programs require you to work in certain fields, such as medicine or law.
Learn More: Federal vs. Private Student Loans: 5 Differences
What are current student loan interest rates?
The interest rates on student loans vary depending on what type of student loan you have. Here are the current interest rates you can expect for both federal and private student loans as well as how they’re set:
Federal student loan interest rates
Rates for federal student loans are set by Congress and can change from year to year. Here are the current federal student loan interest rates for the 2021-22 academic year:
Direct Subsidized Loans: 3.73%
Direct Unsubsidized Loans (undergraduate): 3.73%
Direct Unsubsidized Loans (graduate and professional): 5.28%
Direct PLUS Loans: 6.28%
Private student loan interest rates
Rates for private student loans vary between lenders and are based on market factors. Other factors that will influence the interest rate you qualify for include your credit, repayment term, and whether you have a cosigner.
Here are the current fixed and variable private student loan interest rates offered by Credible partner lenders:
Fixed rates (APR): As low as 3.52%
Variable rates (APR): As low as 0.94%
Learn More: Current Private Student Loan Interest Rates
How does student loan interest work?
An interest rate is a percentage of the loan periodically tacked onto your balance — this is essentially the cost of borrowing money. Your monthly payment often goes toward paying interest first before the rest is allocated toward the principal (the amount you initially borrowed).
Getting a low interest rate could help you save money over the life of the loan and pay off your debt faster.
What is a fixed- vs. variable-rate loan?
Before you borrow, you’ll need to decide whether you want a fixed- or variable-rate student loan . Here’s the difference between the two:
A fixed rate will stay the same over the course of your loan term. This also means your payments won’t ever change.
A variable rate can fluctuate and possibly even increase over time. Because of this, your payments might rise or fall.
How much money can I borrow with a private student loan?
With a private student loan, you’re eligible to borrow up to 100% of what your school says it costs to enroll and attend classes (the “cost of attendance”), minus other financial aid and loans you’ve already received.
How much you can actually borrow will vary by lender and can include annual or cumulative borrowing limits. Other private lender criteria that can affect how much you can borrow might include your credit history, the credit quality of your cosigner, your school’s certified cost of attendance, the degree you’re earning, and more.
Find Out: What Are Student Loan Limits?
When should I apply for a private student loan?
You can apply for private student loans at any time since there’s no deadline tied to them (like filling out the FAFSA for federal loans). But it’s still a good idea to apply for private loans as soon as you know you’ll need them to cover education costs.
Although it varies depending on the lender and your school, it can sometimes take 3 to 5 weeks for you to receive the funds. So, if you’re trying to decide when to apply for a private student loan , be sure to give yourself some time and apply sooner rather than later.
How do I qualify for a student loan?
Each lender has different requirements when it comes to qualifying for a private student loan. But typically you must:
Have a qualifying credit score (or a cosigner with one)
Have a qualifying income and debt-to-income ratio (DTI) (or a cosigner with one)
Be enrolled in an eligible education program
Be a U.S. citizen or legal resident with a Social Security number
Be at least 18 years old and hold a high school diploma or equivalent (or have a cosigner)
Use the loan for education purposes only
Keep in mind that some private lenders offer student loans for international students or student loans for DACA recipients — be sure to check with the lender to see what the requirements are.
Learn: How to Qualify for a Student Loan
Can I get a private student loan with bad credit or no credit?
You can get a student loan with bad credit , but not necessarily on your own. While federal loans don’t require a credit check, private student loans do. Many students don’t qualify for private loans on their own because they don’t have a credit history or they have bad credit. If that’s your situation, you may need to add a cosigner to qualify for a private loan.
Private student loans require a credit application that examines income, employment, and a credit report. The lower your credit score, the higher the risk for the lender, which translates into higher interest rates. One way to get approved for a loan with a lower rate can be to add a creditworthy cosigner to your loan application.
Learn: How to Find a Cosigner
Do I need a cosigner for a private student loan?
It depends, but in most cases, yes. You don’t have to add a cosigner unless you’re under the age of majority in your state (usually between 18 and 21). But if you have a limited or poor credit history, a lender may require you to add a creditworthy cosigner to balance out their risk on the loan.
Plus, more than 90% of private student loans taken out by undergraduate students are cosigned. Even if you’re a graduate student and don’t need one, adding a cosigner with good credit can improve your chances of qualifying for a private student loan at a lower rate.
Credible even makes it easy to compare cosigners to see which cosigner can help get you the best rate.
Learn More: Getting Student Loans Without a Cosigner
How do I compare private student loan lenders?
When weighing private student loan options, it’s important to consider as many lenders as possible. This way, you can find the right loan for you. Here are several important points to compare as you shop around:
Interest rates: The lower the interest rate, the more you can save on interest charges over the life of the loan. Your credit as well as the repayment term you choose will impact the rates you qualify for.
Repayment terms: Available terms vary between lenders — for example, many Credible partners offer terms ranging from five to 20 years. It’s usually a good idea to choose the shortest term you can afford to save as much as you can on interest charges. Opting for a shorter term might also get you a lower interest rate.
Loan amounts: While some lenders will let you borrow up to your school’s cost of attendance, others have smaller loan maximums. Be sure to choose a lender that offers the loan amount you need.
Fees: Some lenders charge fees — such as origination fees or prepayment penalties — which can add to your overall loan cost. Keep in mind that if you take out a loan with one of Credible’s partner lenders, you won’t have to worry about application, origination, or disbursement fees.
Discounts: You might be able to qualify for rate discounts from some lenders. For example, many lenders offer a discount if you sign up for automatic payments, while others offer discounts if you have a previous account with them.
If you’re ready to take out a private student loan, Credible can help. After filling out a single form, you can compare your prequalified rates from multiple lenders in just two minutes. The best part is that this is completely free and won’t affect your credit, so prequalifying is risk-free.
You can also check out our lender reviews for more information: