If you’re shopping for private student loans, you’ll want to make sure you get the best rate possible for your circumstances. But before you begin browsing these products, ask yourself one question first: “Have I already utilized all the federal aid available to me?”
Federal student loans tend to be superior to private student loans for a couple reasons:
- They have many financial safety nets that give borrowers help in the event that they’re having trouble repaying the loan (private student loans don’t usually have those same protections).
- They come with reasonable interest rates.
Still, there’s a time and a place for private student loans, particularly if federal aid won’t cover your entire cost of schooling. But what’s a good rate on a private student loan? Here’s how to find it, and how to hopefully get the lowest possible rate for your credit profile.
What counts as a “good” private student loan rate right now?
A “good” private student loan rate is inherently a bit subjective. As we’ll discuss, a loan’s interest rate shouldn’t be your only deciding factor; some loans with higher interest can work better for your situation than those with lower rates.
Still, one way to define “good” private student loan rates is to hold the proposed rates up against the 2026 federal rates, which are as follows:
- Undergraduate loans – 6.52% fixed
- Graduate/professional loans – 8.07% variable
Take a quick look at any of the major private student loan options, and you’ll notice that their lowest interest rates tend to be significantly lower than these rates—but their highest interest rates are significantly higher. When you rate shop for your private student loan, keep those above figures in mind guidelines for a reasonable rate.
What determines your private student loan rate?
Again, private student loans come with a wide range of interest rates. The one you’re assigned depends on multiple factors. Let’s understand the weightiest ones.
Credit score
Unlike federal student loans, applying for a private student loan will require a credit check. Private lenders generally like to see at least a “good” credit score (defined by FICO as 670 or above), though there’s no blanket requirement across all institutions.
Your credit score is sort of like your financial report card. The better your score, the less risky you appear to lenders. The more trustworthy of a borrower your track record says you are, the more likely you are to land a lower rate with better terms. Messy or thin credit history works against you by potentially lowering your borrowing potential and bumping your rate up.
If your credit profile is less-than-desirable, you may need to add a cosigner to be approved. And if your cosigner’s credit is excellent, you could get very favorable rates and terms.
Cosigner’s credit profile
When you add a cosigner with strong credit, it allows you to qualify for a rate closer to what they’d get if they were the one seeking the loan. That’s because your cosigner is ultimately responsible for repaying the loan. If you fail to make payments, both of your credit profiles suffer.
It’s worth noting that cosigning will trigger a hard credit pull for both of you.
Loan term and repayment type
In general, shorter student loan terms tend to come with lower interest rates. That’s because the lender assumes less long-term risk.
Also potentially affecting your interest rate is your in‑school repayment choice. Interest‑only payments may come with a lower rate than, say, fixed or fully deferred plans. In those cases, unpaid interest is simply added to your balance after your grace period.
How to get the lowest rate possible
Based on the above, you may have already concluded how to proactively lower your interest rate. Here’s what you need to know.
Improve your credit before applying
If you’ve got the luxury of waiting to apply for a loan after you’ve made some improvements to your credit profile, it could pay off in a big way.
Paying down your credit card balances and keeping your amounts owed low is one of the fastest ways to potentially skyrocket your credit score—particularly if your credit utilization is higher than 30%. Lowering your balances in a meaningful way could result in a higher score in as little as a month or two.
Even routine habits like paying your credit cards in full each month and avoiding new credit inquiries can nudge your score into a more favorable interest rate tier.
Add a cosigner
Even if you’ve got a respectable credit score, it could still benefit you to add a cosigner. Those with thin or undesirable credit history may not even be approved without a cosigner—but in any case, if you can find someone with better credit than yours, it can only benefit you to add them (if they’re up for the risk).
Enroll in autopay
Enrolling in autopay tends to come with some sort of lender-specific discount, often around 0.25% off your rate. This is a no-brainer way to save some money; even without a discount, autopay is a good idea as it ensures that you won’t forget to pay your bill each month. Just be sure to keep enough funds in whichever account you use for payment, or you’ll find yourself with fees due to insufficient funds.
How to compare rates across lenders
Another key to getting the lowest possible interest rate is to avoid settling on the first lender that smiles at you. Compare rates across multiple financial institutions to get an idea of what rate your credit profile qualifies for. All else being equal, you’ll generally want to go for the lowest interest.
Here’s how to compare.
Prequalifying without a hard credit check
Many major private lenders allow you to prequalify for a loan by performing a soft pull on your credit. It won’t affect your credit score—it’s just a way for the lender to peek at your credit health. You should then receive an estimated rate. You can (and should) do this with multiple lenders.
Just note that a prequalification is far from a guaranteed offer. You may be prequalified but then denied for the loan. If you decide to formally apply, it’s a good idea to have more than one option, as submitting multiple applications within a 30-day window can result in credit scoring models counting multiple inquiries as one.
Fixed vs. variable: Which to choose
A fixed rate student loan is exactly what it sounds like: interest rates stay the same over the life of the loan. Lock it in now, and you don’t have to worry about the market negatively affecting your cost of borrowing money.
Variable interest rates, on the other hand, move with the market. That can benefit you if rates drop, but it can hurt you if they rise. It’s also more difficult to budget for this loan type, as your monthly payments can vary.
At the time of writing, fixed-rate loans tend to have lower interest than variable-rate loans.
The takeaway
Just because a private student loan imposes a higher interest rate than another doesn’t automatically make it an inferior option.
For example, the loan may be the only one you can get without a cosigner. Not everyone has a cosigner at the ready, after all. Or, a loan with a higher rate may come with lengthier loan terms than a loan with more favorable rates, making your monthly payment more manageable (even if you’ll ultimately pay more in interest).
The point is that interest isn’t the end-all when it comes to finding the perfect private student loan for your situation. A higher-rate loan can still beat delaying your education—or not enrolling at all.
Frequently asked questions
How do private student loan rates compare to federal rates?
Private student loan rates tend to have wide interest rate ranges. The lowest possible rate is considerably cheaper than a federal student loan rate, while the highest is far more expensive. The rate you qualify for depends on your creditworthiness—unlike a federal student loan which doesn’t take into account your credit.
Is 6% a good rate for a private student loan?
6% is a good rate for a private student loan, as it’s below the current federal student loan rates.
Can I get a private student loan with no credit history?
You can get a private student loan with no credit history only if you’ve got a creditworthy cosigner.
What’s the difference between fixed and variable private student loan rates?
Fixed private student loans have a set interest rate for the term of the loan. Variable private student loan rates change based on market performance.
Can I prequalify for a private student loan without hurting my credit?
You can prequalify for a private student loan without hurting your credit. Lenders prequalify you by performing a soft credit inquiry which does not affect your credit.
