Getting federal student aid is the best way to kickstart the funding of your college education. Federal student loans, grants, and work-study jobs are all excellent ways to get the money you need to pay for tuition and all of the other expenses that come with college. But with costs soaring for American students across the country, federal aid often isn’t enough to cover all your needs.

female student studying

That’s where private student loans come in.

When you’ve exhausted all of your other options and still come up short, working with a private student lender can help you get the funds you need. They’re not as borrower-friendly as a federal student loan, but you can still find some with attractive rates and terms. Here are our top picks for best private student loans to help your search get started.

SoFi

SoFiSoFi doesn’t provide loans directly to students, but they do offer parent loans. Fixed rates are low, starting at 4.25% APR and can go up to 8% APR.

Variable rates, on the other hand, range between 3.69% and 7.12%. These rates all assume that you’ve signed up for autopay, which gives a discount when you enroll. If you don’t, expect to pay slightly more on both types of rates.

According to SoFi, parents can actually save with their loan product compared to the Federal Direct Parent PLUS loan. Not only are their rates lower, they also don’t charge an origination fee. However, SoFi doesn’t offer any type of income-contingent repayment plan as the federal PLUS loan does.

Unlike a typical student loan SoFi’s parent loans don’t include any type of deferment period, so you’ll begin making payments as soon as you get funded. The minimum borrowed amount is $5,000 and goes up to the total cost of attendance.

If you ever need another kind of loan offered by SoFi, you will receive a member rate discount of 0.125%. Another member perk is that you receive access to wealth advisors and career coaches.

CommonBond

CommonBondCommonBond actually allows for student loans designed specifically for students, not their parents. You can find loans for both undergraduate and graduate programs, catering to a larger amount of borrowers.

Since the loans aren’t for parents with more established credit and higher income levels, CommonBond’s rates are slightly higher than SoFi’s.

How much higher?

Fixed rates start at 5.48% and cap out at 9.67% while variable rates start at 3.87% and go to 8.95%. Still, compared to the current federal student loan rates for graduate loans, you might actually get a good deal.

Another factor to consider when applying for a CommonBond student loan is the fact that you’ll need a cosigner. Once you make two years of payments, however, you can apply for a release so that you’re the only borrower on the loan.

You’ll receive a six-month grace period after graduation, but your loan still gains interest during this time. If you ever experience economic hardship, you may also apply for forbearance, which is a pretty nice perk for a private lender. While you never want to have to use that type of protection, it’s good to have the option in your back pocket.

Credible

CredibleCredible.com is a student loan marketplace that helps you find multiple private financing options for your college tuition — all using a single application.

Rates are also extremely competitive through Credible’s network of student lenders. When picking a fixed rate, you could find deals as low as 3.5% APR. Comfortable with a variable interest rate? Those start at just 2.14%.

Another perk of using Credible to find your student loan is to take your pick from a variety of repayment options. You can choose deferred payments, interest-only, and others. It just depends on what you need.

In addition to matching you with loan originators, you can also find refinancing options through Credible. In fact, they claim that their users average a savings of $18,668 when going through this process. That’s a lot of money saved!

Credible’s network also allows the option of applying for a student loan or refinance along with a cosigner. So if your credit history is poor or simply limited, you may qualify for better terms with the help of a cosigner. Once you start making on-time payments, you can typically release the cosigner after 24 to 36 months.

Ascent

AscentFor flexible private student loan options, consider Ascent. You can get either a tuition loan that requires a cosigner, or an independent loan that’s just for students, either undergraduate or graduate.

Rates start off quite low for private loans, with fixed loans beginning at 4.87% and going as high as 14.36%. For a variable loan, expect to pay between 3.49% and 12.74%.

You can also receive a 0.25% deduction in your interest rate if you sign up for autopay on your monthly bill. Loan amounts range from $1,000 up to your cost of attendance, although your total loan amount can’t exceed $200,000. This is actually a pretty low minimum, so if you need a smaller private student loan to bridge the gap in your financing, Ascent may be a good fit.

Terms last either 5, 12 or 15 years but choose carefully because you can’t change the timeline once you receive the funds. While you’re still in school, you can choose to defer payments (with interest accruing, of course) or make interest-only payments.

Want to cut back on the amount of interest you pay over time?

Ascent also offers the ability to do a $25 minimum payment plan while you’re in school. It’s not a huge financial burden, but can save you more compared to deferred payments. Worried about your future job prospects? After graduation, you can apply for financial hardship forbearance if needed — something many private lenders don’t offer.

SunTrust

SunTrustFor flexible repayment terms and competitive interest rates on student loans, SunTrust is a strong contender.

You can borrow between $1,001 and $95,000 over a 7, 10, or 15-year term. And with deferral and interest-only payments available while you’re in school, you don’t have to worry about stretching your pennies too far until you graduate.

When you do, you could also qualify for a 1% deduction on your principal balance. On a $50,000 private student loan, that would amount to $500 — not bad! It’s a nice benefit assuming all other things are equal (particularly your APR). Once you start making regular payments, you could also get up to a 0.5% discount on your interest rate, which is one of the highest we’ve seen.

So what exactly are SunTrust’s interest rates for student loans?

For a fixed loan, the range is 4.75% to 11.5% APR. For a variable loan, the range is 3% to 10.05% APR. You’ll likely need a cosigner, particularly for undergraduate loans but there’s a simple release process once you’ve made enough consecutive payments on time.

Discover

DiscoverNot only does Discover offer undergraduate, graduate, and parent loans, it also rewards students for academic achievement.

You can earn a 1% cashback reward on each new loan when you earn a 3.0 GPA or higher. Discover also boasts no fees, including no late fees.

So what are the specifics for a Discover loan?

Rates start a bit higher than some of the other private lenders. Fixed loans are between 6.24% and 12.99% while variable loans are between 3.87% and 11.12%. Despite slightly higher fixed rates, you do get some flexible repayment terms, including forbearance for a financial hardship and the ability to temporarily reduce your payments.

Another unique benefit is that Discover gives you ongoing access to loan specialists who can assist you at any time, day or night. So if you think you’ll have questions or feel insecure in the student loan process, this could be a worthwhile option for you.

Sallie Mae

Sallie MaeOffering a broad range of student loans, Sallie Mae can fit a lot of different needs. You can get private student loans for both undergraduate and graduate programs, as well as parent loans if they’d rather take on the financial burden instead of the student.

What kind of interest rates can you expect?

For fixed-rate loans, interest rates start at 5.75% and go up to 12.87%. Variable loans come with rates between 3.25% and 12.62%. If you can get on the lower end of that fixed rate range, it’s just about 1.25% more than a direct federal student loan.

When you’re in school, you can defer payments until after a six-month grace period upon graduation, but interest still accrues. Alternatively, you can make interest-only payments during your school years to help lower the financial burden.

Another option is to make a fixed payment during school and your grace period, which can save you money over time compared to the deferred payment option.

For example, a $25 monthly payment during that period could save you 12% compared to deferring payment altogether. It’s easy to apply for any student loan online with Sallie Mae, and you can receive a decision in about 15 minutes.

When to Use a Private Student Loan

We briefly mentioned that federal aid almost always provides better benefits to students than a private student loan does. To make sure you’re getting the best funding for your college education, make sure you fill out the Free Application for Student Aid (FAFSA). You need to do this each and every year you’re in school, not just for your freshman year.

Applying for the FAFSA offers need-based financing and can include several different types of aid. Grants are available, which don’t need to be repaid as long as you continue to meet their eligibility criteria. This is obviously the best choice because it’s free money! But of course, it won’t cover your total cost of attendance.

The federal government also offers student loans. While many private lenders are managing to offer interest rates that are somewhat competitive with federal loan rates, they can’t beat the flexible repayment options.

There are a variety of income-based repayment plans, as well as student loan forgiveness for certain types of professions. A final type of aid offered by the federal government is the work-study program.

This lets students qualify for (usually) on-campus part-time jobs that are related to their area of study. You can also apply for scholarships through your college, corporations, and community organizations. Once you’ve exhausted all of these options and still come up short for your college funds, then it’s time to consider a private student loan.

It seems like a lot of work to apply for each type of student aid, but it’s an extremely important process. Borrowing tens of thousands of dollars may not seem like a big deal right now, but those monthly bills are going to stick with you for a long time. Give yourself the time and space to maximize your aid so that you can minimize your financial load in the future.

How to Pick the Best Private Student Lender

Once you determine that you do in fact need a private student loan to meet your college costs, make sure you make the right choice. Start by figuring out if you need a private student loan that goes under your name or your parents.

For direct student loans, decide if you’ll have access to a cosigner (like a parent) or if you’ll take on the burden entirely on your own. Those decisions alone can narrow down your lender.

Next, think about what your income will be like when you’re attending school. Will you have a part-time job or ample savings on hand to take care of any payments due? If not, you may need to find a lender who offers deferred payment, even if it means accruing more interest.

You may also be interested in future forbearance options. No one wants to imagine themselves as going through financial hardship once they’ve earned their degree, but it’s a very real possibility for anyone. If you don’t have a strong financial safety net, you may benefit from choosing a private lender that has some type of financial hardship repayment flexibility.

Predicting your future needs for student loan repayment is like gazing into a crystal ball, which we simply can’t do. So the best way to tackle the issue is to hope for the best, but prepare for the worst.

You likely don’t know what your job situation or income will be like by the time you graduate, so try to buffer in as much flexibility as possible. Also be careful with your spending and refrain from racking up unnecessary debt. Your future self will thank you!