Student loans 101: what to compare

By Kaydee Ambas, CFEI® | Published on October 21, 2025

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Choosing a private student loan is a big decision—and not one you should rush. Whether you're heading to grad school or helping a student fund their undergraduate education, understanding what to compare can make a major difference in your long-term financial well-being.

In this guide, we’ll walk you through the key factors to consider when evaluating private student loans, so you can borrow with confidence.

1. Interest rate: Fixed vs. variable

Interest rate is one of the first things most borrowers look at—and for good reason. It determines how much you’ll pay over time on top of the amount you borrow.

• Fixed rate: Stays the same for the life of your loan, offering predictability and peace of mind.
• Variable rate: Can change over time (usually based on market indexes), which means your payments could go up or down.

Tip: If you value stability, a fixed rate might make sense. If you're confident you’ll repay quickly and want to start with a lower rate, a variable rate could be worth exploring.

2. Grace period: How long before repayment starts?

The grace period is the time between when you leave school and when you’re required to start making full payments. Federal loans offer a 6-month grace period, but private lenders vary.

Some lenders extend that timeline, giving you more breathing room to settle into post-grad life or find a job without the pressure of immediate loan payments.

Why it matters: A longer grace period can provide financial flexibility during a transition period—especially helpful in uncertain job markets.

3. Repayment options: Is the loan flexible?

Many private lenders now offer more than one way to repay your loan. The right option for you depends on your financial situation while in school.

Common options include:

• Deferred: No payments until after graduation
• Interest-only: Pay interest while in school to avoid capitalization
• Flat payment: Small fixed payments during school
• Full repayment: Start paying both principal and interest right away

Flexibility is key. The ability to switch plans later can help you adapt if your financial situation changes.

4. Fees: Look beyond the rate

Some private lenders charge origination fees, late fees, or even prepayment penalties. These hidden costs can add up quickly and eat into your budget.

Questions to ask:

• Is there an origination fee?
• Are there penalties for paying off early?
• What happens if I miss a payment?

Pro tip: A lender that offers no origination fees or hidden charges can save you money over the life of your loan.

5. Cosigner support: Will you have shared tools and transparency?

Many students need a cosigner to qualify for a private loan—often a parent or guardian. If you’re applying with a cosigner, it’s important to consider how the lender treats both borrowers and cosigners throughout the life of the loan.

Look for:

• Clear explanation of responsibilities
• Access to loan details for both parties
• Support if financial situations change

Loans should feel like a shared decision—not a solo burden.

The bottom line

The best private student loan for you is one that aligns with your budget, your goals, and your need for flexibility. Before signing on the dotted line, make sure you understand:

• The type of interest rate
• Your grace period
• Repayment plan options
• Any fees involved
• How the lender supports both you and your cosigner

Knowledge = power. When you know what to compare, you can borrow smarter—and feel good about the decision you’re making for your future.

Ready to explore your options?

Earnest offers flexible student loans with transparent terms, no origination fees, and customizable repayment plans to fit your life.