How to choose the best private student loan for you: 5 factors that matter most

By Corey Buhay | Published on October 21, 2025

)

Private student loans can be a great way to cover the cost of your higher education, especially if you’re filling in gaps your federal loans didn’t cover. But unlike federal loans, private funding can come from dozens of different companies, each with its own policies, fees, and requirements. If you’re used to operating on Free Application for Federal Student Aid (FAFSA®) autopilot, entering the world of private lending can feel overwhelming.

There are so many options to choose from. Every company says it’s the best—but which one is actually flexible enough to suit your needs? Choosing the wrong private student loan can cost you thousands. Here’s how to compare private student loans, cut through the marketing speak, and zero in on what matters most.

Compare each lender’s interest rates and fees

It can be tempting to scroll through a few lenders, pick the one with the lowest advertised interest rate, and call the job done. However, rate comparison is one of the most important parts of private student loan shopping. Interest rates aren’t everything, but the rate you end up with can have a huge impact on how much your monthly bill is—and on how much you’ll pay for your loan in the long run. Here are a few things to consider.

Interest rate type: fixed- vs. variable-rate loans

First, make sure the lenders you’re considering have your preferred interest rate type. There are two main types of interest rate: fixed and variable. Fixed interest rates remain the same over the life of the loan, no matter what the economy does. Variable interest rates tend to start out lower but they can increase or decrease according to national trends and market fluctuations. So, if you go variable and the Federal Reserve raises rates in the future, you could end up paying more on your student loans. If you’re hoping to take advantage of short-term savings and pay off your loans fast, variable rates might make sense for you. If you like the stability and security of a set rate, a fixed-rate loan could be the better bet.

Your prequalification rate

While many companies advertise low interest rates, those rates aren’t necessarily the ones you’ll qualify for. To get the best idea of what a lender will actually charge you, see if you can get a rate check, a step sometimes called “prequalification.” You’ll enter your loan information and a few personal details. Then, the lender will check your credit score and send you a custom rate estimate. Keep in mind that this is different from a loan offer; that estimate could always change a bit once you submit an actual loan application. However, this is the best way to get a feel for roughly how much you’ll end up paying. Note: Before you submit your details for prequalification, first confirm that the lender will only conduct a “soft credit check,” which won’t affect your credit. If they don’t state this clearly on their site, give them a call. If their prequalification process involves a hard credit check, you could see a small but temporary dip in your credit score.

Annual percentage rate (APR)

When you compare private student loan interest rates, make sure you’re comparing APRs—not just interest rates. A loan’s APR is a measure of the total annual cost of the loan, including fees as well as interest. While some lenders—like Earnest—charge zero fees, many other lenders charge origination fees, late fees, and other costs. Looking at lenders’ APRs ensures you’re comparing apples to apples instead of apples to oranges, and will help you make a more informed choice.

Check the available loan terms

Make sure the lenders you’re considering offer your preferred repayment term. If you’re hoping to minimize your interest payments and get out of debt fast, a 5- to 7-year loan term might be better for you. If your priority is keeping your monthly payments low, a 10- to 15-year loan term could serve you better. Some lenders, including Earnest, let you choose a loan term that fits your schedule. Others tend to be more rigid. Double-check each lender’s offerings to figure out what’s available.

See if they allow cosigners

Few new college students have the strong credit history required to qualify for a lender’s lowest rates. Fortunately, many lenders will let you apply with a cosigner. A cosigner is a creditworthy adult who agrees to vouch for you and pay your loan bills if you become unable to. This provides an extra layer of security for the lender, and it gives the borrower the opportunity to piggyback off their cosigner’s stronger credit score, unlocking lower rates. If you don’t have excellent credit, look for lenders who allow cosigners. If you have an adult who’s able to help you nab a lower interest rate, this could help you save hundreds if not thousands of dollars in interest charges over the life of the loan.

Research policies on repayment flexibility

Some lenders are more flexible than others. Some offer a nine-month post-graduation grace period, while others offer only six months. Many offer an Auto-Pay discount once you begin to make payments, while others may offer no discounts at all.

Also look for hardship provisions. Some lenders (like Earnest) have a deferment program you can apply for if you lose your job or stumble into a financial emergency. Earnest also lets borrowers skip a payment once per year without penalty.

Read up on the lender’s reputation

While interest rates and loan terms are important, they’re not everything. The average student borrower takes 20 years to pay off their student loans—which means you could be dealing with this lender for decades. So, it’s best to choose carefully. As part of your research, read reviews from independent sites like Trustpilot and Better Business Bureau. Make sure the lender has a reputation for responsiveness and stellar customer service.

Compare private student loan options now

Private student loan shopping can feel scary at first, but it helps to know what to look for. Once you have a few lenders you’re interested in, make a spreadsheet or list and write down each lender’s APRs, terms, and policies so you can compare them side by side.

When it comes to determining a loan’s total cost to you, a loan calculator can help. Try Earnest’s student loan calculator to see what your monthly payment might look like with different loan amounts and terms.

)

About the Author

Corey Buhay is a writer and editor based in Boulder, Colorado. She’s passionate about literature, the outdoors, and doing her taxes by hand. She has been writing about student loans and personal finance for Earnest since 2019. You’ll find her work in Outside Magazine, Backpacker Magazine, Smithsonian, and The Denver Post.