How Do I Choose a Private Student Loan Lender?

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Kristen Kuchar

By Kristen Kuchar

May 9, 2020

Borrowers seek the best private student loan by considering the cost of a loan, eligibility restrictions, flexible repayment plans and other loan and lender characteristics. 

Before your borrow private student loans, exhaust all other resources – scholarships, grants, employer tuition assistance and other ways to cut college costs. Federal student loans are preferred over private loans because they offer many benefits – potential loan forgiveness, options for income-based repayment, potential for subsidized loans, and generous deferment options. 

If you’ve decided private student loans are right for you, has a list of the best private lenders and reviews for each lender.

Requirements for Approval

Each private lender has a different set of criteria for whether or not you will be approved for a loan. This generally includes certain requirements for:

  • Credit score
  • Income
  • Debt-to-income ratios
  • Education
  • Citizenship
  • Enrollment in a qualified education program

You’ll want to understand what is required before applying.

Interest Rates

Interest rates are one of the biggest factors when it comes to choosing a student loan. The lower the interest rate, the less you will pay in interest and the less the loan will cost you overall. A lower interest rate saves you money. However, you don’t want to just solely look at the interest rate. There are other factors to consider on this list.

Many lenders offer a small discount on your interest rate if you sign up for auto debit, where the monthly student loan payment is automatically transferred from your bank account. PNC Bank, LendKey, Sallie Mae, CommonBond and College Ave are just a few that offer this feature.

Repayment Options

There is a lot to consider when it comes to repaying your loan.

What is the repayment term? Do they offer any flexibility with payment term? A longer repayment term will yield lower monthly payments, but cost you more overall.

  • A 5- or 7-year loan term means you’ll pay your loan off faster and pay less interest, but your monthly payment will be larger.
  • Some lenders offer payment terms up to 20 years or more. This means you’ll pay more in interest and more overall, but your monthly payments are smaller. 

Does the lender offer an option to pause payments if you lose your job or have an economic hardship? A payment pause may be called a deferment or forbearance.

Do they offer any other special features? Some lenders allow you to skip a payment with approval, choose your due date, and choose your monthly payment. Nelnet and LendKey let you customize your due date.

Cosigner Required

Is a cosigner required for the student loan? Many private student loans do require a cosigner, so if you don’t have access to one, you need to find a lender who doesn’t.

Cosigner Release

If you are choosing a lender that requires a cosigner, it may be important to you and your cosigner that they offer an option for cosigner release. This means that once certain requirements are met, the cosigner is completely released from the loan. This is important to many cosigners, since they are legally responsible for repaying the loan and it impacts their credit. Many times you will need to make a certain number of consecutive on-time payments and satisfy credit criteria to qualify for the release.

College Ave, Sallie Mae, CommonBond, LendKey and Nelnet all offer a cosigner release option.

Special Features

Some private lenders offer special features that could sweeten the deal. Here are some examples:

  • Sallie Mae offers a free scholarship search and free tutoring for borrowers.
  • College Ave offers a $150 statement credit once you graduate.
  • Discover offers a 1% cash rewards if you have a 3.0 GPA.
  • LendKey offers career and job assistance.


Some loans may charge a fee for origination, for applying, payment return fees or late payment fees. Discover, for example, doesn’t charge late fees.

Rankings and Reviews

Before you apply, read reviews of each lender to get an understanding of their reputation.

Credible is a good tool for comparing multiple lenders at once.

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

A good place to start:

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