If you have already maxed out your federal student loans and still have a gap between your aid package and your total cost of attendance, a private student loan may be your next step. But private loans are not created equal. The difference between one lender and another can mean thousands of dollars over the life of your loan, and the terms buried in the fine print can affect your finances for a decade or more. Before you sign anything, you need to know which numbers and features to compare -- and why each one matters.
Interest Rates: The Single Biggest Factor
Your interest rate determines how much you pay on top of what you actually borrowed. Even a small difference adds up fast over 10 or 15 years.
Fixed vs. Variable Rates
A fixed rate stays the same from the day you borrow until the day you pay off the loan. A variable rate starts lower but can rise or fall over time based on a benchmark index, usually the 30-day Average Secured Overnight Financing Rate (SOFR).
Here is what major lenders are advertising for the 2025-26 year:
| Lender | Fixed APR Range | Variable APR Range | |---|---|---| | Sallie Mae | 2.89% -- 17.49% | 3.87% -- 16.50% | | Earnest | 3.14% -- 16.74% | 5.24% -- 17.10% | | College Ave | 3.23% -- 15.99% | 5.14% -- 16.49% | | SoFi | 3.23% -- 15.99% | 5.14% -- 16.49% |
All of these ranges include a 0.25% autopay discount for setting up automatic monthly payments. That small reduction is free money -- sign up for it no matter which lender you pick.
How to Think About the Range
The low end of these ranges sits well below the 6.39% federal Direct Loan rate for undergraduates in 2025-26. But those rock-bottom rates are reserved for borrowers (or cosigners) with excellent credit -- typically a FICO score above 750 and strong income. If you are a first-time borrower with a thin credit file, you will land closer to the middle or high end. That is why comparing your actual offered rate across multiple lenders matters far more than comparing advertised minimums.
A Quick Rule of Thumb
If you plan to pay off the loan within five years, a variable rate might save you money because it starts lower. If you are on a 10- to 15-year repayment track, a fixed rate gives you certainty. You will never wake up to a payment that jumped because the index moved.
Fees: The Hidden Cost Most Borrowers Overlook
Federal Direct Loans charge a loan fee of 1.057% deducted before the money reaches you. Private lenders handle fees differently, and this is one area where many private loans come out ahead.
Origination Fees
Most major private lenders -- including Sallie Mae, Earnest, College Ave, and SoFi -- charge zero origination fees. You receive the full amount you borrow. However, some smaller or specialty lenders charge 1% to 5% of the loan amount. Always check the disclosure before accepting.
Late Fees
This is where lenders diverge. Some charge a flat fee around $20 per missed payment, while others charge up to 6% of the missed payment amount. Earnest and SoFi stand out because they charge no late fees at all. That does not mean you should pay late -- late payments still damage your credit -- but a zero-late-fee policy gives you a safety net if you hit a rough month.
Prepayment Penalties
There are none. The Higher Education Opportunity Act banned prepayment penalties on all private student loans back in 2008. You can always pay extra or pay off your loan early without owing a single extra dollar.
Repayment Options: Flexibility During and After School
How and when you start paying back your loan varies from lender to lender. The repayment structure you choose affects both your monthly budget and your total cost.
In-School Payment Options
Most private lenders let you pick one of these paths while you are still enrolled:
- Full principal and interest payments -- You start paying immediately, which saves you the most money over time.
- Interest-only payments -- You cover just the interest each month, which keeps the balance from growing.
- Flat payment -- Some lenders, like College Ave, let you pay a flat $25 per month while in school.
- Full deferment -- You make no payments until after you graduate. Interest still builds up (capitalizes), and that means you end up owing more.
Choosing full deferment feels painless now but can add thousands to your balance by graduation. If you can swing even interest-only payments, you will come out ahead.
Loan Terms
Repayment terms typically range from 5 to 20 years. College Ave offers terms of 5, 8, 10, and 20 years, while SoFi caps its in-school loan terms at 15 years. On a $30,000 loan at 7% fixed, a 10-year term costs you about $11,600 in interest. Stretch that to 20 years, and you pay roughly $25,800 -- more than double.
The Cosigner Question
Why Cosigners Matter
About 90% of private student loans for undergraduates involve a cosigner, usually a parent or guardian. A cosigner with strong credit can pull your interest rate down significantly -- potentially saving you 3 to 5 percentage points compared to borrowing on your own. But your cosigner is equally responsible for the debt. If you miss payments, their credit takes the hit too.
Cosigner Release
This feature lets your cosigner off the hook after you prove you can handle the loan alone. Not all lenders offer it, and timelines vary widely:
- [Sallie Mae](https://www.salliemae.com/student-loans/manage-your-private-student-loan/apply-to-release-cosigner/) -- Eligible after just 12 months of on-time principal and interest payments.
- SoFi and Earnest -- Eligible after 24 months of consecutive on-time payments.
- [College Ave](https://help.collegeave.com/hc/en-us/articles/5560603133079-Can-a-cosigner-be-released-from-a-loan) -- Eligible after half of the original repayment term has elapsed. On a 10-year loan, that means you wait 5 years.
To qualify, you generally need a credit score of 650 or higher, proof of sufficient income, and U.S. citizenship or permanent residency. If cosigner release matters to your family, prioritize lenders with shorter timelines and clear requirements.
Hardship Protections: Deferment and Forbearance
You might lose a job, face a medical emergency, or need to go back to school. Federal loans have well-defined safety nets for these situations. Private loans? It depends entirely on the lender.
What to Look For
- In-school deferment -- Most private lenders let you pause payments if you return to school at least half-time.
- Military deferment -- Available from most major lenders for active-duty service members.
- Financial hardship forbearance -- This is where private lenders get stingy. Many offer a maximum of 12 months of total forbearance over the life of the loan. Some offer less. And unlike federal subsidized loans, interest almost always continues to accrue during both deferment and forbearance on private loans.
Before you borrow, ask each lender directly: how many months of forbearance do you allow, and under what conditions? This information is often hard to find on lender websites, but it matters enormously if you ever need it.
Borrower Protections and Customer Service
The Consumer Financial Protection Bureau (CFPB) received roughly 4,500 private student loan complaints between July 2024 and June 2025 -- a 33% increase from the prior year. Common complaints included misleading refinancing information, unfair denial of disability discharges, and slow response times. Check the CFPB complaint database for any lender you are considering. A lender that is hard to reach when things are going well will be even harder to reach when something goes wrong.
Your Comparison Checklist
Gather offers from at least three lenders and compare them across these categories:
- Actual offered APR (not the advertised range)
- Fixed or variable (and if variable, what is the rate cap?)
- Origination fees (zero from most major lenders, but check)
- Late fee policy (flat fee, percentage, or none)
- Repayment term options (5, 10, 15, 20 years)
- In-school payment choices (deferment, interest-only, flat payment, full payment)
- Cosigner release timeline and requirements
- Forbearance and deferment policies
- Autopay discount (almost always 0.25%)
- Death and disability discharge policy
Prequalification with a soft credit pull -- which does not hurt your score -- is available from lenders like Earnest, SoFi, and College Ave. Use it. Compare real numbers, not marketing.
Common Challenges
Getting accurate rate quotes without a cosigner. If you are an undergraduate with limited credit history, most lenders will not give you a competitive rate on your own. You may need a cosigner to even qualify, and the advertised rates assume strong credit. Be prepared for your actual offer to look different from the homepage numbers.
Understanding variable rate risk. If the SOFR index rises, your monthly payment rises with it -- and there may not be a cap on how high it can go within the lender's stated maximum (SoFi caps variable rates at 17.95%). Many borrowers underestimate how much a variable rate can shift over a 10-year period.
Limited hardship options compared to federal loans. Federal loans offer income-driven repayment, extended deferment, and potential forgiveness. Private loans offer none of these. If your financial situation changes, your options are limited to whatever your lender's forbearance policy allows -- usually 12 months total, with interest still accruing.
Comparing across different terms and structures. Two lenders might both offer you 6.5%, but if one is a 10-year term and the other is a 15-year term, the total cost is very different. Always compare using the same repayment term and look at total cost -- not just the monthly payment.
Navigating cosigner release requirements. The rules differ so much from lender to lender that many families are surprised when their cosigner cannot be released for five or more years. Read the cosigner release policy before you borrow, not after.
The Bottom Line
Private student loans are a tool, not a trap -- but only if you shop carefully. Get multiple offers, read every disclosure, and compare real numbers side by side. Pay attention to the rate, the fees, the repayment flexibility, and especially the hardship protections. The lowest rate means nothing if the lender will not work with you when life gets complicated.
Always borrow federal first. Federal Direct Loans at 6.39% for undergraduates in 2025-26 come with income-driven repayment, deferment, forbearance, and potential forgiveness that no private lender can match. Use private loans only for the gap that remains after federal aid, scholarships, and savings.
Frequently Asked Questions
Should I choose a fixed or variable interest rate?
If you plan to repay your loan over 10 years or more, a fixed rate protects you from rising interest rates. If you expect to pay off the loan quickly -- within three to five years -- a variable rate may save you money because it typically starts lower. Consider how much payment uncertainty you can handle month to month.
Do private student loans charge origination fees?
Most major lenders, including Sallie Mae, Earnest, College Ave, and SoFi, charge no origination fees -- an advantage over federal Direct Loans, which charge a 1.057% loan fee. Some smaller lenders charge 1% to 5%, so always confirm before accepting an offer.
Can I get a private student loan without a cosigner?
You can, but it is difficult as an undergraduate. Most lenders require credit history and income that most 18-year-olds do not have. Without a cosigner, you will likely face higher rates or may not qualify at all. About 90% of undergraduate private loan borrowers use a cosigner.
How does cosigner release work?
After a set number of on-time payments -- anywhere from 12 months at Sallie Mae to half the loan term at College Ave -- you can apply to remove your cosigner. You will need to demonstrate sufficient income and creditworthiness on your own. Approval is not guaranteed; it depends on meeting the lender's standards at the time you apply.
What happens if I cannot make my private loan payments?
Contact your lender immediately. Most offer some form of forbearance -- typically up to 12 months total -- but interest continues to accrue. Unlike federal loans, private loans do not offer income-driven repayment plans. Some borrowers refinance to lower their payment, but this requires good credit and may extend your term.
How many lenders should I compare before borrowing?
At least three. Use prequalification tools that rely on soft credit pulls so your credit score is not affected. Compare the actual rates you are offered, not the ranges on lender websites. Even a 0.5% difference in rate can save you over $1,000 on a $30,000 loan over 10 years.
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Your borrowing plan should start with a clear picture of what you need and what you can realistically repay. If you want help mapping out how federal aid, scholarships, and private loans fit together for your specific school, build your plan on CollegeLens.
-- Sravani at CollegeLens