Interest rates on private student loans are currently offer variable rates as low as 2.99%. Before applying for private student loans, you should always take advantage of federal student aid, including federal loans. Should you find you’re still short on the money you needed to pay for the cost of attendance at your school, private student loans may be the best student loan plan for you. Some people can even qualify for more competitive student loan interest rates and lower fees in private student loans.
Federal Student Loan vs. Private Student Loan Interest Rate
Federal student loan rates are the same fixed rate for all borrowers regardless of credit score. These rates for federal student loans are updated yearly on July 1st.
Private student loan interest rates are competitive and based on current market trends. When borrowing a private student loan, you will be offered a fixed or variable interest rate. If you choose a loan with a variable interest rate, that variable interest rate/variable APR is subject to change throughout the life of the loan.
The loan interest rate you receive for a private student loan with depends on your credit score or that of your creditworthy cosigner. While there is no minimum credit score needed to qualify for federal student loans, private student loan applicants can be denied if their credit score does not meet the minimum standards, indicating possible bad credit and a risk for the lender.
Quickly compare federal student loan interest rates and private student loan interest rates with the tables below.
Federal Student Loans for 2022 - 2023
| Student Loan Type | Rate (Fixed APR) |
|---|---|
| Subsidized Loan | 4.99% |
| Unsubsidized Loan | 4.99% |
| PLUS Loan | 7.54% |
Private Student Loans for 2022 - 2023
| Student Loan Type | Rate (Variable APR) |
|---|---|
| Lowest In-School Student Loan Rate | 2.99% * |
*Private student loan interest rates are updated monthly
Below are some of the most competitive student loan products available.
Compare Featured Lenders
- Competitive fixed and variable APRs starting at 3.99%1
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years2
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 12/01/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
Student Loan Origination Fees
Federal Student Loan Origination Fee
Federal student loans are all charged an origination fee. This is a percentage of the total federal student loan that the lender (in this case the federal government) charges to fund the loan. This origination fee is deducted from the total student loan amount prior to disbursement. Federal student loan origination fees are set every year on October 1 for loans disbursed from October 1 through September 30. Origination fees depend on which type of federal student loan has been approved for the student, as outlined below.
For loans disbursed from Oct. 1, 2022 to Sept. 30, 2023
Direct Subsidized or Direct Unsubsidized Loans for undergraduate students: 1.057%
Direct Unsubsidized Loans for graduate students: 1.057%
Direct PLUS (for parents, graduate students or professional students): 4.228%
Private Student Loan Origination Fee
Some private lenders may charge an origination fee for a private student loan, but generally there is no origination fee for private loans in most cases. In fact, the lenders we promote on our website charge zero origination fees for private student loans. Students and parents should make sure to read the details of the student loan program to understand whether any other fees or expenses, like late fees, may come into the picture.
Average Private Student Loan Interest Rate
The average interest rate on private student loans is difficult to calculate as it depends on several factors such as the loan lender, minimum credit score, private loan terms, current market trends, and length of the loan. Even with these existing variables, the lowest advertised private student loan interest rate may be lower than the fixed rate student loans offered by the federal government. But the rate you receive could also be higher than federal student loans at any specific time, depending on the current market trends and your credit worthiness. Private student loan rates may be fixed or variable and fluctuating with modern market trends. To receive the best possible student loan interest rates, it is vital to apply for your loan with a cosigner that maintains a high credit score. For a historical view of average private student loan interest rates, we break down the numbers here.
How Does Student Loan Interest Work?
How Does Federal Student Loan Interest Work?
When looking at the interest on federal loans, remember that they are not credit-based loans, which means that your eligibility for approval is not based on any minimum credit score. Federal loans have a fixed interest rate and, depending on market conditions, are commonly higher than private loan interest rates. Fixed interest rates/fixed APR gives a borrower peace of mind knowing that as time passes, their interest rates will not increase student loan payments over time.
How Does Private Student Loan Interest Work?
One of the best benefits of private student loans is that the borrower can review different lenders before making a decision and review their fixed and variable interest rate offers. When considering for applying for private student loans, make sure that you fully understand the concept of interest rates, especially variable interest rates/variable APR and the potential for the rate to increase or decrease over the life of the loan. As the market shifts, private student loan interest rates will also shift. Many applicants choose private loans because interest rates can be much lower than the fixed interest rates/fixed APR attached to federal student loans.
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