Private student loans can help cover college costs once federal aid runs out. As with other types of borrowing, your credit score affects the interest rate you qualify for — with stronger credit typically leading to lower rates — and private lenders often provide higher borrowing limits than federal loan programs.
But unlike federal student loans, private loans come with far fewer borrower protections. Options like income-driven repayment, broad hardship relief and loan forgiveness are typically limited, or unavailable altogether.
Before you sign anything, here's what to know about the do's and don'ts of private student loans.
The do's of private student loans
Do compare the total cost, not just the monthly payment
Before you commit to any new private student loan, ask for the total repayment amount, not just the monthly payment. That's the figure that actually tells you what you're paying for your education. Remember that a lower monthly payment, while easier on the budget in the short-term, means you're paying more interest over time than with the same loan amount stretched over higher monthly payments.
If you're looking to keep costs low over the life of the loan, Sallie Mae is one of the more competitive options on rates and it charges no origination, application or prepayment fees, plus there's a 0.25% autopay discount.
- Loans available to part-time and continuing ed students
- Co-signer release after just 12 payments
- No origination fee
- Offers loans for a wide variety of educational needs including: bar study, medical school, residency and relocation costs, dental school, residency and relocation costs, nursing school/health professions, commercial flight school, coding boot camp and professional certifications
- No student loan refinancing
- Doesn't offer parent loans
- Hard credit check to prequalify
- Late payment fee
Do ask about hardship options before you need them
Since private lenders set their own policies, ask beforehand about hardship protections they offer. Before you finalize a loan, find out whether the lender offers forbearance and eligibility requirements, how long it lasts and whether or not interest continues to accrue during that period. It's a question most borrowers skip and one that matters a lot when something unexpected happens.
For borrowers who want that flexibility built in from the start, College Ave offers hardship forbearance, deferment and six- to nine-month grace periods. SoFi offers protections like deferment, forbearance, reduced repayment options and loan modification.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Undergraduate and graduate students, parents, health professionals
$5,000 minimum (or up to state); maximum up to cost of attendance
5, 7, 10, 15, years; up to 20 years for refinancing loans
Terms apply.
Undergraduate and graduate students, parents, international students with U.S. co-signer
$1,000 up to the cost of attendance ($180,000 lifelong maximum)
5, 8, 10, 15 years for undergraduate loans, up to 20 years for graduate loans
Terms apply
Do know when refinancing actually makes sense
Once you have a private student loan, down the line you may come across the decision to refinance to score a lower interest rate. If your credit score has improved significantly since you first borrowed, if your variable rate has climbed or if you're looking to remove a co-signer and don't qualify for a co-signer release, refinancing into a new loan could get you better terms.
The don'ts of private student loans
Don't turn to private loans before exhausting federal options
Federal student loans come with fixed interest rates, standardized repayment options and legal protections that private loans simply don't have. If you haven't yet maxed out your federal aid, submitted a FAFSA or explored grants and work study, start there first.
Don't ignore the fine print
Some private student loan contracts include auto-default clauses, which allow the lender to declare your loan immediately due in full if your co-signer dies or files for bankruptcy, even if you've been paying on time the whole time. Major banks largely stopped this practice after pressure from the CFPB, but it can still appear in contracts from smaller lenders. Before you sign, read the section on what triggers a default. If your contract has this clause and your co-signer is older, it's worth pursuing release proactively or looking into refinancing the loan into your name alone.
Don't rush to consolidate federal student loans into private ones
Although consolidation is a way to simplify repayment or snag a lower interest rate, consolidating federal student loans into a single private loan means permanently giving up federal protections, including any future access to income-driven repayment, deferment programs or loan forgiveness. If you're looking to simplify repayment, explore federal consolidation options first, which keep your loans in the federal system.
Don't stay silent if you're struggling to pay
If you're having trouble making your payments on your private student loan, reach out to your servicer. Private loans don't have the same grace period as federal loans; many go into default after just three or four missed payments, compared to 270 days for most federal loans. Some private lenders do offer hardship forbearance, but it's discretionary and you have to ask for it.
Don't assume your co-signer can get off the loan
Some private lenders offer a co-signer release option, which basically removes the co-signer from the loan entirely after you make a certain number of on-time payments and pass a credit check. Make sure you know eligibility requirements and any income or credit criteria.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every student loan article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of student loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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