Finding the best student loans and current student loan rates can be daunting.
Paying for college is already challenging enough, but how do you find a lender? What should you think about? How do you know you’re getting a good deal? It can all be overwhelming.
To keep it simple, you should always borrow federal loans first, then private.
When I was in college, there weren’t a lot of options. If you got Federal loans, you filled out your FAFSA and waited for your email from the financial aid office. If you were looking for private loans, you went to a major bank.
That’s all changed today. There are lots of options, and comparing them all could be a challenge. If you want to quickly get a quote, check out our partner College Ave. You can get a quote and find some of the lowest student loan rates in minutes.
Now, here's what you need to know about finding the best student loans and best interest rates.
Federal vs. Private Student Loans
The first thing to understand is that you don’t get a choice in your student loan rates with Federal loans. Federal student loan rates are set by the government and change periodically.
However, for most people borrowing Federal student loans, that doesn’t matter because they are trying to take advantage of the special student loan repayment programs or loan forgiveness plans that come with Federal student loans.
Federal student loan interest rates vary, from as low as 4.993% to as high as 7.543%. They actually increased by over a percentage this year. Check out the tables below to see where your federal student loan interest rate may fall:
2024 - 2025 Federal Student Loan Interest Rates
If you're planning on attending college in the fall, these rates are for loans taken after July 1, 2024 but before July 1, 2025:
Loan Type | Borrower Type | Interest Rate |
|---|---|---|
Direct Subsidized Loan | Undergraduate | 6.53% |
Direct Unsubsidized Loan | Undergraduate | 6.53% |
Direct Unsubsidized Loan | Graduate or Professional | 8.08% |
Direct PLUS Loan | Parents, Graduates, and Professional | 9.08% |
The half point interest rate increases continue a trend that began at the start of the pandemic, after interest rates reached a historic low. See StudentAid.gov for information about federal loans.
For many borrowers, Federal loans with be the best student loans. However, if you have great credit (or a cosigner with great credit), a private loan could potentially save you a lot of money. But you do lose out on government benefits (like loan forgiveness and income-driven repayment) if you opt for a private loan.
If you're curious about what future student loan rates could look like, see this guide: Predicting Future Student Loan Rates.
Note: The new Federal student loan interest rates for the next academic year will be announced in May 2025.
Finding The Best Student Loans
If you go the private student loan route, there are a lot of lenders with different programs and it’s important to compare.
We’ve reviewed most of the major student loan lenders and have a comparison tool here: Comparing Private Student Loan Lenders.
We also recommend really researching the different loan programs out there. There are a lot of lenders that offer different programs and incentives that can be helpful depending on the type of degree and what you believe your employment will look like after graduation.
If you already have student loans and are looking to refinance, it’s also essential to compare.
Some of the key features that you should look for to find the best student loans include:
- Interest Rate (the lower, the better)
- Loan Term (anywhere from 3 years to 25 years)
- Origination Fees (you want none)
- Repayment Plan Options
- Forbearance Options
- Bonus Offers
- No Prepayment Penalties
- Student Loan Borrowing Limits
- Cosigner Release (since it's almost impossible to get a student loan without a cosigner)
Comparing The Best Student Loan Rates
The best private student loan rates range from 4.99% APR to over 16.99% APR, depending on various factors - including your credit score, household income, cosigner, and more.
We recommend using a service like Credible to compare the best student loan rates. With Credible, you can compare multiple lenders in about 2 minutes. It’s quick and easy, and will give you a snapshot of what you might see for student loan rates.
Check it out here and see for yourself: Credible Private Student Loan Comparison.
Credible doesn't have every lender available, and it's important to shop around. When shopping for a student loan, remember that most banks and credit unions will do a "soft pull" of your credit on the initial application. That's okay. If you do all your loan shopping within a 2 week period of time, it shouldn't hurt your score overall.
When you do a formal application, the lender will do a hard pull. You should only move to this part once you're ready to go.
Finally, remember it can take about 30 days to complete the application from start to finish. If you're looking to start college in August, you should probably have your loans all ready to go no later than July. Start shopping now! You can find the best private loans here.
Our Picks For The Best Student Loans
If you're ready to shop around, here are our picks for the best private student loans. We recommend comparing all of them - it honestly only takes a few minutes. You can take a look at our full list of the best private student loan lenders.
Considering everything else you've done to apply for college at this point in time, spending an hour to compare the best student loans is a no brainer!
1. Credible
Credible is our #1 pick for the best private student loans because they are a comparison tool that shops all the major private loan providers to give you the best rates and terms possible. Instead of manually doing the work, Credible shops multiple lenders, including:
Their platform covers roughly half of the major private student loan lenders available. The cool thing with Credible is that it takes about 2 minutes, and you can get a good sense of your loan options. Read our full Credible review.
2. College Ave
College Ave is a private student loan lender that typically offers some of the lowest interest rates in the market at any given time.
You'll have the option to pay back your private student loan in 5, 8, 10, or 15 years. The minimum loan amount is $1,000 and College Ave will cover up to 100% of the cost of attendance.
College Ave also has multiple options for repayment programs once you are out of school.
Read our full College Ave review.
3. Earnest
Earnest is another lender that offers strong student loan options - with good rates and loan terms. They also don't charge any fees for origination, disbursement, prepayment, or late payment.
In repayment, they also allow you to have a 9 month grace period after graduation (most lenders are 6 months), and they allow you to skip a payment once a year.
Read our full Earnest review.
4. ELFI
ELFI is one of the largest student loan originators, and as a result, they typically offer some of the lowest student loan rates available.
They offer extremely competitive rates, with standard loan terms and conditions. You can borrow from 5 to 15 years, and they can lend across the entire United States, including Puerto Rico.
The only major drawback is you must be enrolled in a bachelor's degree or more advanced education program.
Check our out full ELFI student loans review here.
5. Ascent
Ascent Student Loans offers competitive in-school loans and has two products - cosigner student loans and non-cosigner student loans. Ascent is one of the few companies that makes their criteria on getting a private student loan without a cosigner very clear.
Ascent doesn't charge any application fees, and they have solid repayment options - including deferment while in school. They also offer very competitive interest rates on their loans.
Read our full Ascent review.
6. Sallie Mae
Sallie Mae is probably one of the most well-known lenders on this list. They are the nation's largest private student loan lender by loan volume. As a result, they also offer some of the most competitive private student loans and parent loans out there.
You can take out Sallie Mae student loans starting at just $1,000 (which is one of the lowest) and can borrow up to the total cost of education¹. Sallie Mae has over 8 different student loan options to choose from and a variety of repayment plans too.
Read our full Sallie Mae review here.
Are Private Student Loans Right For You?
It can be hard to know if private student loans are right for you. Honestly... there is no right answer. Some people swear off private student loans. Other people have found them to be a helpful way to pay for college while saving money in interest.
It's important to remember that Federal student loans come with a lot of options, and they usually have a very good interest rate. With Federal student loans, you get access to income-driven repayment plans, student loan forgiveness options, and more. You don't get many benefits with private student loans.
However, private student loans typically give you the best student loan rates possible.
You might also consider an income-sharing agreement as an alternative to a private loan. Income-sharing agreements are where you get money for school in exchange for paying back a portion of your income after graduation. These plans are typically structured in a way that means you only pay back if you see a positive return on your education. Check out our guide to income-sharing agreements here.
As with everything related to paying for college, we recommend you follow the Proper Order Of Operations To Pay For College. Make sure you've exhausted your other aid, Federal student loans, and working before diving into private student loans. If you're at that point already, then make sure you're shopping around for the best student loan rates and terms.
Common Student Loan FAQs
Here are some of the most common questions we get when it comes to finding the best student loans and borrowing to pay for college.
Which is better - federal or private student loans?
You should always borrow the maximum amount of federal student loans before moving to private student loans. Federal student loans offer more benefits, such as loan forgiveness and flexible repayment plans, compared to private student loans.
What type of student loan is best?
Federal student loans, specifically subsidized student loans, are the best to pay for college. Then you have unsubsidized loans. Many borrowers will also be offered parent PLUS loans, which we don't recommend. Then you have private student loan options.
How can you find the lowest student loan rate?
Interest on federal student loans is fixed for all borrowers based on your school year. These rates are typically some of the lowest in the marketplace. If you're looking at private student loans, you need to shop around and get multiple quotes on your student loan rate.
What are the drawbacks of student loans?
Student loans have drawbacks just like any other form of debt. You're going to need to repay the debt, and your ability to repay is going to be based on your income after graduation. However, unlike other loan types, student loans have very few options for discharge - meaning you can't easily get rid of them in bankruptcy. And the government and private lenders have a lot of collection options available to them.
Why Should You Trust Us
I am America’s Student Loan Debt Expert™ and have been actively writing about and covering student loans since 2009. Myself and the team here at The College Investor have been actively tracking student loan providers since 2015 and have reviewed, tested, and followed almost every provider and lender in the space.
Furthermore, our compliance team reviews the rates and terms on these listing every weekday to ensure they are accurate. That way you can be sure you're looking at an accurate and up-to-date rate when you're comparison shopping.
Final Thoughts
No matter what path you take in paying for school, it's essential that you educate yourself on your options. Whether your looking for the best student loans, or other financial aid options, you're going to have to spend a little time doing homework.
If you haven't already checked out financial aid options, look at this guide: Student Loan And Financial Aid Options By State. Many states maintain their own special financial aid and student loan programs that could save you even more money or help pay for college!
Ascent Student Loans
Ascent Funding, LLC college loan products are made available by Bank of Lake Mills or DR Bank, each Member FDIC.
* To be eligible for coaching through Ascent's Student Success Program, the student borrower must be an undergraduate who has been approved for and completed an Ascent college loan application and has agreed to the terms of the coaching program. Ascent’s consumer loans for bootcamps and graduate student loans do not qualify for this program.
Earnest
Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107
Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.
© 2024 Earnest LLC. All rights reserved.
Sallie Mae
¹ Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note—first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared toward anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications, including the New York Times, Wall Street Journal, Washington Post, ABC, NBC, Today, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor Reviewed by: Richelle Hawley
