5 Best Private Student Loans for 2018

Taking out private student loans to pay for college is one of the most expensive ways to borrow for school, yet many college students make the mistake of turning to private loans first before pursuing other financing options.

The danger with private loans is in how costly they can be — interest rates on private student loans were as high as 14.24% in September 2017 vs. 4.45% for federal student loans — and how few flexible repayment options they carry for borrowers who struggle to pay them back.

However, federal loans can only go so far, especially if you are pursuing a postgraduate degree that requires many more years of schooling. Once you’ve tapped out all your access to federal aid and you still need money to cover educational costs, a private student loan could help you fill the gap.

The Best Private Student Loan Companies for 2018

Determine if a private student loan is right for you

There’s a lot to compare when you’re considering taking out a student loan from a private lender. Your annual percentage rate (APR), fees and loan term could impact how much you pay in interest over the lifetime of the loan. But other features, such as a straightforward application process and the option to apply for cosigner release, can also be important to borrowers.

We started the search for the best private student loan companies by identifying the 10 largest national private student loan lenders. Each lender’s undergraduate student loan got graded on seven important factors:

Interest ratesPrivate lenders offering loans with varying interest rates depending on the applicant’s creditworthiness. However, they do advertise an interest-rate range that you can use to compare one lender with another. Each lender was assigned grades based on its lowest and highest APRs compared with the average lowest and highest APRs for all 10 lenders. Each lender received four scores, as they all offer variable-rate and fixed-rate loans, and the lenders with below-average APRs received top marks.

After assigning the lenders a score for each factor, we compared their average scores and ranked them from highest to lowest. Here are the resulting top five student loan lenders:

#1 SunTrust Custom Choice Loan#2 Wells Fargo Collegiate Student Loan#3 Sallie Mae Smart Option Student Loan#4 LendKey Private Student Loan#5 Citizens Bank Student Loan[LendKeyPSLAPR]

SunTrust Custom Choice Loan

Wells Fargo Collegiate Loan

Sallie Mae Smart Option Student Loan

LendKey Private Student Loan

Citizens Bank Student Loan

Ranking

No. 1

No. 2

No. 3

No. 4

No. 5

Borrowing limit

$150,000

$120,000

School-certified cost of attendance

Varies by lender

$120,000

Variable APR*

3.75-10.80%

5.40-10.84%

3.87-8.79%

4.51-9.59%

4.65-11.45%

Fixed APR*

4.75-11.50%

6.84-11.67%

5.74-8.56%

5.36-9.69%

5.99-11.45%

Application fees

None

None

None

None

None

Online application

Good

Good

Good

Very good

Good

Interest rate discounts

0.25% with autopay, or 0.50% if you autopay from a SunTrust Bank account.

0.25% with autopay. Additional 0.25% to 0.50% interest rate deduction if you have an eligible Wells Fargo account when you get your student loan.

0.25% with autopay

0.25% with autopay, you may have to pay from an account with the lender to qualify.

0.25% with autopay. Additional 0.25% interest rate deduction if you have an eligible Citizens Bank account when you get your student loan.

Repayment terms

5, 7, or 15 years

15 years

5 - 15 years

10 years

5, 10 or 15 years

Cosign release option

Yes, you can apply after 36 to 48 consecutive full payments

Yes, you can apply after 24 consecutive full payments. Or, after 48 consecutive full payments if your first payment is late.

Yes, you can apply after 12 consecutive full payments

Yes, you can apply after 12 to 36 consecutive full payments

Yes, you can apply after 36 consecutive full payments

Max deferment

Full deferment

Full deferment

Full deferment

$25 monthly payments

Full deferment

Bonus

Request a 1% principal (the loan amount that was disbursed) reduction after you graduate.

None.

None.

None.

None.

[/LendKeyPSLAPR]*Rates are current as of May 1, 2018, and may include a 0.25% autopay discount.

Why we like SunTrustThere are several savings opportunities that help SunTrust’s Custom Choice Loan that help it stand out from the competition. First, as of April 1, 2018, SunTrust had the lowest possible fixed interest rate of the 10 lenders we compared.

Additionally, you can get a 0.50% interest rate discount if you sign up for autopay from a SunTrust Bank account, or a 0.25% interest rate discount with autopay from a different account. And SunTrust Bank will reduce your loan balance by 1% of the disbursed loan amount when you apply for the reduction and show proof of graduation with a bachelor’s degree or higher.

Borrowers can also choose from four different repayment plans: start making full payments immediately, make interest-only payments, pay $25 a month or fully defer payments.

Where SunTrust may fall shortThe one big drawback to the SunTrust’s Custom Choice Loan is that you’ll have to make 36 or 48 consecutive full payments before you can apply to release a cosigner.

You’ll likely recognize Wells Fargo, as it’s one of the largest banks in the U.S., but you may not have realized that it offers student loans. In fact, the company actually has several different student loan programs, with offerings for community college students, undergraduates or graduates and professional school students.

Where Wells Fargo may fall shortYou have to choose a 15-year term for your student loan, and if you stick to making your required payment amount you could wind up paying more in interest than if you took out a shorter loan elsewhere.

Also, be sure that you make your first full payment on time. If it’s late, you’ll need to make 48 consecutive full payments (rather than 24) before you can apply to release a cosigner.

Sallie Mae offers a wide range of student loans to undergraduate, graduate and professional students, and their parents. That may not come as a surprise though, Sallie Mae is one of the most widely known private student loan companies.

Why we like Sallie MaeThe undergraduate Smart Option Student Loan has a few standout benefits, such as the option to release a cosigner after making 12 consecutive monthly payments. You can also choose from three repayment plans: full deferment, $25 monthly payments or interest-only payments. And if you’re having trouble making payments after graduation, you can request to make 12 interest-only payments.

Borrowers also get non-loan related perks, such as quarterly access to one of their FICO credit scores. You can also choose to get 120 minutes of free tutoring from Chegg Tutors or free access to Chegg Study for four months (or a combination of the two).

Where Sallie Mae may fall shortOverall, Sallie Mae offers borrowers a variety of choices and benefits. However, it doesn’t offer as many potential discounts as some of the other top lenders. Still, if you find you qualify for a lower pre-discount rate with Sallie Mae than another lender, Sallie Mae could indeed be a smart option.

LendKey stands apart from the other lenders on the top five list because it technically doesn’t loan you money. Instead, LendKey has created a centralized, uniform (and easy-to-use) application that you fill out to get student loan offers from regional banks and credit unions.

Why we like LendKeyBeing able to fill out a single application and compare multiple loan options can help you find a low rate, plus the application is quick and easy to fill out. Additionally, some of LendKey’s lenders may let you release a cosigner after making 12 consecutive full payments, which ties for the fewest number of required payments among the top lenders.

LendKey particularly stands because the high-end APR rate for variable- and fixed-rate loans from its lending network are 2% to 3% lower than other competitors. That may not seem like a big difference, but it could lower your monthly payments and lead to saving hundreds to thousands of dollars over the lifetime of the loan.

Where LendKey may fall shortRegional banks and credit unions may not offer student loans nationally, so the interest rate ranges that LendKey advertises may not be available to every borrower. The fine print and eligibility requirements could also vary from one lender to another.

For example, some lenders may require you use autopay from an account with the lender to qualify for a 0.25% interest rate discounts (others may let you qualify with autopay from any account). And how many consecutive payments you need to make before you can apply for a cosigner release, if you can apply at all, could also vary.

All LendKey lenders only offer a 10-year loan term. Other lenders offer a shorter term, which sometimes corresponds with lower interest rates, or you want to lower your monthly payment by choosing a longer term from a different lender.

Also, LendKey student loans don’t offer full deferment and you’ll have to make $25 monthly payments once your loan is disbursed. This could lower your total cost of borrowing compared with full deferment, but if you don’t have any income while you’re at school, it could be difficult to afford the monthly payment.

Citizens Bank is a large traditional bank with over 1,000 branches in the Midwest and along the East Coast. It offers student loans to undergraduate and graduate students, their parents and student loan refinancing.

Why we like Citizens BankCitizens Bank’s lowest possible variable-rate APR is the lowest of our top five lenders, but even if you don’t qualify for the lowest rate it’s worth considering. And if you or your cosigner have a qualifying bank account or loan from Citizens Bank, as that could make you eligible for a permanent 0.25% interest rate reduction on your student loan.

You may also qualify for multi-year approval if you have more than a year left before you graduate. Often, you may need to apply for a student loan at the start of each term. But with multi-year approval, you could choose (there’s no obligation) to borrow additional money for another term without having to fill out a new application.

Where Citizens Bank may fall shortThe primary drawback is the 36-payment requirement to apply to release a cosigner. This aside, Citizens Bank offers competitive rates, a variety of loan terms and interest rate discounts that are in line or could be better than many of the other private student loan companies.

After comparing your options, you may be able to identify the private student loan lender that offers you the best overall loan. However, you may want to take a step back and consider all your options before committing.

Also, if you haven’t built credit of your own and don’t have a creditworthy cosigner, federal student loans could be your only option. Most don’t have a credit requirement, and the federal loans for graduate or professional students and parents that have a credit check don’t vary their interest rate based on your credit. By contrast, even with a creditworthy cosigner, you may wind up with higher interest rate if you take out a private student loan.