Private student loans are credit-based loans from banks, credit unions, or online lenders that help cover education costs when savings, scholarships, and federal aid are not enough. They usually have fewer protections than federal loans, so it is important to understand the terms before borrowing.

Basic idea

Private student loans are used to pay for tuition, fees, housing, books, and other education-related expenses up to your school’s cost of attendance. The lender sends the money to your school first, and any extra funds may be passed on to you for other allowed expenses.

Who offers them

These loans come from private financial institutions such as banks, credit unions, and specialized education lenders, not the federal government. Each lender sets its own rules for eligibility, interest rates, and repayment options.

How you qualify

Approval usually depends on credit and income, so undergraduates often need a creditworthy cosigner with a good credit score and stable income. Lenders may also require that you attend an eligible school, enroll at least half-time, and meet citizenship or residency requirements.

Interest rates and fees

Private student loans can have fixed or variable interest rates, which are set based on your (and any cosigner’s) credit profile and chosen repayment terms. Rates are sometimes lower than federal rates for highly qualified borrowers, but they are often higher overall and may come with additional fees.

Repayment and protections

Repayment options vary by lender; some let you defer payments while in school, while others require immediate interest-only or full payments. Unlike federal loans, private loans generally do not offer income-driven repayment, broad forgiveness programs, or as many hardship protections, so managing them can be more difficult if your income drops.

If you share where you live and whether you are undergraduate or graduate, a more tailored explanation (and checklist) can be provided for your situation.