Best Private Student Loans of July 2026
Private student loans are provided by private lenders and banks, whereas federal student loans are funded by the U.S. government. Private loans aren’t eligible for federally mandated deferment options, forbearance programs and income-driven repayment plans. They also don’t qualify for federal student loan forgiveness and cancellation programs, such as Public Service Loan Forgiveness.
Before you consider private student loans, make the most of federal and free financial aid, including federal student loans, need-based government grants and merit-based private scholarships. Even if you don’t think you’ll need financial assistance or think you won’t qualify, submit the Free Application for Federal Student Aid, or FAFSA.
With federal student loans, there are limits on how much you can borrow each academic year and overall. If you’ve reached the federal student loan borrowing limit and you’ve exhausted other means for paying for college – such as federal PLUS loans, grants and scholarships – then you might consider private student loans to bridge the financing gap.
| Federal Student Loans | Private Student Loans | |
| Loan limits | $31,000 for most dependent undergraduates and $57,500 for independent undergraduates; graduate and professional students can borrow up to $257,500 total, including all federal undergraduate loans. | Typically, up to 100% of the cost of attendance minus other aid received. |
| Interest rates | 6.52% to 9.07% fixed interest rates for new direct loans first disbursed between July 1, 2026, and June 30, 2027. | Can be fixed or variable; average APRs range from about 3% to 18%. |
| Origination fee | 1.057% for direct subsidized and unsubsidized loans; 4.228% for Direct PLUS loans. | Varies. |
| Approval process | Fill out a FAFSA form; no credit check needed to qualify unless you’re taking out a PLUS loan. | Fill out an application through the lender; a credit check is typically required. |
| Repayment plans | Choose from standard, graduated or, if eligible, extended repayment or an income-driven repayment plan. Beginning July 1, 2026, borrowers may choose a new income-driven plan, RAP. | You may have a choice between deferring payments, paying interest-only while in school, making partial payments in school, or starting principal and interest payments right away. |
| Extra support | Deferment and forbearance programs; income-driven repayment plans; forgiveness and discharge options. | Private lenders may offer forbearance programs, but they aren’t guaranteed. |
Unlike federal student loans, private student loans do not offer standard repayment plans and interest rates. Your credit rating affects the types of loans available to you and the student loan interest rate you’ll pay. If you have a cosigner, you may be able to access loans with better terms.
Loan Types
Private lenders may offer different types of loans depending on the degree you’re pursuing. The loan type can affect your loan amount, interest rate and repayment terms.
- Undergraduate school loans. You can take out undergraduate loans from a private lender to pay for expenses while you pursue a bachelor’s degree.
- Graduate or professional school loans. Graduate school loans tend to have higher maximum loan amounts than undergraduate loans, reflecting the higher cost of attending school for a master’s degree or doctorate. Some lenders feature special loan programs for business, law or medical school.
- Parent loans. Lenders offer these to parents of students. Some families have an informal agreement that the child will make loan payments after graduating, but the legal responsibility to repay the loan falls on the parents.
- Community college or technical training. Some lenders provide loans to students who are pursuing two-year degrees, attending nontraditional schools or completing career-training programs.
Loan Terms
The loan term is the length of the loan’s repayment period, which could range from five to 20 years for private student loans. Typically, shorter loans offer lower interest rates and lower total costs. They’re a good option if you can afford the payments, which tend to be higher. On the other hand, longer-term loans may come with lower payments, but they’re usually more expensive to repay in the long run.
Loan Limits
Lenders may set a maximum annual amount you can borrow or establish a combined private and federal amount you must fall under to qualify for a loan. You may also be limited to borrowing up to your school’s certified cost of attendance, which is outlined in your financial aid award letter.
Most lenders also have minimum amounts you must borrow, which may vary based on your state. Where minimum loan amounts are higher, a private student loan may not be the best option if you only need a few hundred dollars for textbooks or another small expense.
Interest Rate Types
Lenders offer student loans with either fixed or adjustable interest rates. Carefully consider your options – once you’ve taken out your loan, you may not be able to switch your interest rate type without refinancing.
When you’re comparing student loans from different lenders, look at the annual percentage rate, or APR, rather than just the advertised interest rate. The APR is your total cost of borrowing each year and includes interest and fees.
Cosigners
College-aged borrowers – many of whom are still teenagers – may not have had enough time to build a sufficient credit history to qualify for a private student loan. A creditworthy cosigner, such as a parent or trusted relative, can help you qualify for a private student loan. Some lenders even require a cosigner, meaning you’ll need someone to cosign the loan in order to be approved.
A cosigner shares equal responsibility for repaying the loan, so be sure to discuss the terms and expectations for repayment to avoid souring a personal relationship. Some (but not all) private student loan lenders offer a cosigner release, which removes the cosigner from the loan after a certain period of on-time payments.
Pros
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Potentially lower interest rates. For well-qualified applicants, private student loans may offer more competitive interest rates than other gap funding options, like Direct PLUS loans. However, private student loan rates can run high for borrowers with bad credit.
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Usually no origination fees. Many private student loan lenders don’t charge origination fees, though late or returned-payment fees may apply, depending on the lender. Federal student loans have loan fees, which are subtracted from your loan amount and reduce the payout that you ultimately receive.
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Ability to compare rates. Private student loan lenders let you prequalify to check your estimated interest rate and loan terms with a soft credit inquiry, which won’t hurt your credit score. This helps you compare costs and shop around with multiple lenders before formally applying for a loan.
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Cosigner release. Some lenders offer a cosigner release, in which the cosigner is removed from the loan after the student makes a certain number of on-time payments and meets other eligibility criteria.
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Speed. Private student loans are generally processed faster than federal student loans. Some providers advertise that they can deliver approval in hours and funds in days.
Cons
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Credit-based eligibility. Private student loans require a credit check, and their terms depend on the applicant’s credit rating. Without a creditworthy cosigner, many students may not be able to get approved or may only qualify for a high interest rate. Federal student loans (except federal PLUS loans) do not require a credit check.
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No guaranteed hardship options. Private student loans aren’t eligible for federally mandated deferment options, forbearance programs and income-driven repayment plans. Some private student loan lenders offer deferment or forbearance options, but they might not be as flexible as your options with federal student loans.
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No federal forgiveness programs. Several federal student loan forgiveness and cancellation programs aren’t available with private student loans, such as Public Service Loan Forgiveness and borrower defense to repayment.
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Shorter default period and little recourse. Federal student loans go into default status after 270 days of nonpayment, and when they do, you may have several options for getting your loans out of default. Private student loans are typically charged off when they become 120 days past due, according to the Consumer Financial Protection Bureau.
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Risk for cosigners. Cosigners take on debt and risk when they add their names to private student loans, since they will be equally responsible for repaying the debt. If the student can’t make payments on time, this can hurt the cosigner’s credit.
Student loan interest rates slightly decreased last month, according to a U.S. News analysis of minimum and maximum APRs reported by private lenders. Student loan rates have trended higher over the past year, with variable rates climbing by a higher margin than fixed rates.
Here are the in-school student loan rates offered during the month of June 2026:
- Average fixed APR range: 3.60% – 15.12% (Compared with 3.77% – 15.14% the previous month).
- Average variable APR range: 5.14% – 14.60% (Compared with 5.31% – 14.77% the previous month).
The APRs on the lower end of the range are generally reserved for applicants with a high credit score and low debt-to-income ratio, while those with poor credit or limited income will see higher rates.
If you don’t have the credit history needed to qualify for a competitive student loan rate, consider enlisting the help of a cosigner. Additionally, shop around with multiple student loan lenders to ensure you’re getting the lowest possible rate for your financial situation.
- Cost. The cost of your private student loan depends on several factors, including the interest rate and the type of interest. Look closely at fees to calculate how they’ll affect your total borrowing costs. Always read the loan terms closely to identify potential fees.
- Products. Determine the type of student loan you’ll need, how much you want to borrow, and check that the lenders’ offerings match your requirements. Compare loan terms and limits to narrow your list.
- Eligibility requirements. Research lender eligibility criteria, such as citizenship, enrollment status, age, and income and credit history.
- Additional features. The fine print of private student loans can vary from one lender to another. Some features or benefits could make repayment easier, lower your interest rate or help you choose the right lender for your needs.
The private student loan process is generally faster than that of federal student loans.
- Check your eligibility. The lender will check basic eligibility for the loan using your income, credit history and other factors. Additionally, you’ll need to fill out a Private Education Loan Applicant Self-Certification form through your school’s financial aid office.
- Submit your documentation. You’ll be asked for paperwork proving your identity and financial information; for instance, Social Security card and recent pay stubs. Many private student loan lenders let you apply online and receive a decision quickly.
- Await approval and disbursement. Once you’re approved for a private student loan, you can choose the interest rate type, the repayment plan and other loan terms, and then sign the loan agreement. The lender will contact your school to verify that you’re eligible for the loan amount you requested. Private student loan proceeds are sent directly to the school.
Apply for grants and scholarships. Need-based grants are awarded at the federal, state or college level. As for scholarships, students should start their search locally, and national scholarships are listed on database search websites, including the U.S. News Scholarship Finder.
Consider community college. Studying for one or two years at a community college before transferring to a four-year college can translate to significant savings. Just be sure that your community college credits will transfer to your university of choice. Also, opting for an in-state public institution may save you tens of thousands on tuition and fees compared with an out-of-state university or a private college.
Ask about a payment plan. Some colleges let you spread out certain costs over monthly payments. These plans usually cover only direct costs, such as tuition and sometimes campus housing and food, and charge an enrollment fee but no interest.
Live at home. Room and board costs averaged $14,398 for students living on campus during the 2025-26 school year, according to the Education Department. Determine the cost of your commute to see whether living at home could cut this expense.
Get a part-time job. A part-time job can pay for personal expenses, supplement federal financial aid and help you gain valuable work experience. Some employers may help pay for college, with benefits such as tuition assistance or paid internships.
Ask family or friends for support. If someone can help pay for tuition or supplies, graciously accept their help.
Take a year off. Weigh the total cost of a private student loan against the cost of delaying your education a year and working to save for college, and then decide what suits you best.
Several factors determine a private student loan interest rate, including the loan amount and repayment length, as well as the borrower’s credit history and debt-to-income ratio. If you have a low credit score or no established credit history, you may be offered a higher interest rate or require a cosigner. Whether you’re pursuing career training, a bachelor’s degree or a master’s degree and whether it is a fixed- or variable-rate student loan also factor in to your private student loan interest rate.
Most private student loan lenders require a credit score in the mid-600s to qualify. If the student doesn’t have a sufficient credit score, the lender may require a creditworthy cosigner who does. Additionally, higher credit scores translate to lower interest rates, and vice versa.
Federal student loans have borrowing limits that vary based on the academic year and whether you’re an independent or dependent student. With private student loans, you can usually borrow up to 100% of the school’s cost of attendance, although some lenders may also impose their own maximum borrowing limits.
