Understanding what banks offer Student Loans is crucial for students exploring their options to finance higher education, as programs differ widely between federal and private lenders, with eligibility, rates, and borrower protections varying by institution.
Who This Loan Is For
- Undergraduate and graduate students seeking to supplement or replace federal aid, especially those who have exhausted federal options (such as Direct Subsidized and Unsubsidized Loans).
- Parents seeking to borrow for dependent students (through federal PLUS or, in some cases, co-signed private loans).
- U.S. citizens or permanent residents are typically eligible for federal loans; private lenders set their own requirements, often requiring a strong credit history or a creditworthy cosigner, especially for younger students.
- Some private lenders also offer loans for international students with an eligible U.S.-based cosigner; official criteria should be checked directly with each lender or via the Federal Student Aid homepage.
Key Facts (At-a-Glance)
| Item | Details |
|---|---|
| Program Type | Federal Direct Loans (Subsidized/Unsubsidized/PLUS); Private loans from banks, credit unions, and fintech lenders. |
| Interest | Federal loans have fixed rates set by Congress annually. Private loans may offer fixed or variable APRs; sample/illustrative ranges (late 2025) range from ~4.74%–9.99% for fixed, 5.99%–9.99% for variable rates. |
| Accrual | Federal subsidized loans: government pays interest in school/grace periods. Unsubsidized and private loans: borrower always responsible for interest. Capitalization applies after deferment or forbearance. |
| Repayment Plans | Federal: Standard, Graduated, Extended, Income-Driven Repayment (IDR) plans. Private: lender-defined, typically fewer flexible options. |
| Grace Period | Federal Direct Loans: usually 6 months post-enrollment. Private: varies by lender (sample/illustrative; check terms directly). |
| Deferment/Forbearance | Federal: multiple reasons (in-school, hardship); private: terms vary, some offer limited forbearance. |
| Forgiveness/Discharge | Federal: public service, disability, school closure, IDR-endpoint. Private: rare; usually only in extreme cases (death/disability). |
| Annual & Aggregate Limits | Federal: published limits by year/level; private: limited by cost of attendance minus other aid (sample/illustrative; varies by lender). |
| Fees | Federal: origination fees set annually (sample/illustrative: usually around 1–4%). Private: some have no origination fees; others may—review loan disclosures. |
| Cosigner Rules (Private) | Many private loans require a cosigner if the borrower has limited credit; some lenders allow cosigner release after a set number of on-time payments. |
Pros
- Federal loans offer robust protections for borrowers, including fixed interest rates, access to income-driven repayment plans, deferment/forbearance, and the potential for loan forgiveness or discharge in qualifying circumstances.
- Private loans can fill funding gaps not covered by federal loans or grants, and sometimes feature flexible borrowing limits suited to higher-cost programs or non-traditional enrollment.
Cons
- Interest on unsubsidized federal and almost all private student loans accrues immediately, causing balances to grow over time if not repaid promptly.
- Private loans usually require a strong credit history or cosigner, have less flexible repayment terms, and rarely offer forgiveness or comprehensive borrower protections.
Costs, Interest & Repayment Mechanics
- Interest is the cost to borrow, typically expressed as an annual percentage rate (APR). Federal loans have fixed APRs set annually; private lenders may offer fixed or variable rates, often adjusted for credit score and market conditions.
- Capitalization occurs when unpaid interest is added to the principal, increasing the amount on which future interest accrues.
- Income-driven repayment plans (IDR) recalculate monthly payments based on income and family size, usually available for federal loans. Private lenders rarely offer IDR, instead offering level or graduated payments.
- Sample/illustrative: A $10,000 loan at 6% fixed APR repaid over 10 years will yield a sample/illustrative monthly payment and total cost; confirm with each lender’s calculator and review official disclosures.
| Example | Principal | Rate/APR | Plan | Monthly Payment | Total Paid |
|---|---|---|---|---|---|
| Sample Scenario | $10,000 | 6.0% (sample/illustrative) | Standard 10-year | $111 (sample/illustrative) | $13,322 (sample/illustrative) |
Application & Disbursement Steps
- Complete the FAFSA form for all federal loans, or the lender’s official application for private student loans.
- For federal loans: schools determine aid eligibility and send offers. For private loans, complete credit application, and, if required, add a cosigner. Review terms and disclosures before acceptance.
- Federal loans require entrance counseling and a Master Promissory Note (MPN). Private lenders may send funds to the school or directly to the borrower; schools may certify cost of attendance before disbursement.
Repayment, Deferment & Forbearance
- Federal student loan repayment usually begins six months after graduation, leaving school, or dropping below half-time enrollment (grace period).
- Private loans may have repayment, interest-only, or deferment options while in school, but detailed terms vary by lender.
- Deferment on federal loans is available for in-school, military, or hardship reasons; forbearance provides temporary payment suspension during financial hardship. Most private lenders offer more limited options (sometimes called forbearance, usually three to 12 months cumulative, sample/illustrative).
Forgiveness & Discharge Pathways
- Federal loans: qualify for Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, total and permanent disability discharge, or loan discharge for school closure. Each has strict qualifying rules—consult current information on the official forgiveness guidance.
- Private student loans rarely offer forgiveness or discharge outside of documented death or (in rare cases) permanent disability.
Risks & Responsible Borrowing
- Failure to repay student loans leads to default, which can damage credit scores, result in collections, wage garnishment, or loss of eligibility for federal benefits and new aid.
- Borrow only what is necessary; always maximize scholarships, grants, and federal loans before considering private student loans.
Alternatives & Comparisons
Side-by-Side Comparison
| Feature | Federal Loans | Private Loans |
|---|---|---|
| Underwriting | Eligibility-based, no credit check except for PLUS | Credit/income-based, cosigner often required |
| Rate Type | Fixed | Fixed/Variable |
| Protections | Multiple—IDR, deferment, forbearance, forgiveness | Limited—varies by lender |
| Forgiveness Potential | Possible (various programs) | Rare |
- Federal student loans should be maximized before seeking private loans due to borrower protections and flexible repayment.
- Private student loans are worth considering for costs not covered by federal aid. Notable banks and private lenders frequently referenced in official and consumer guidance (early 2025) include Ascent, Citizens, College Ave, Custom Choice, Nelnet Bank, Sallie Mae, SoFi, and credit unions. Policies, rates, and borrower benefits vary. Always verify current offerings and disclosures via the official lender page or financial aid office before proceeding.
Frequently Asked Questions
What banks offer student loans?
- Several banks, fintech companies, and credit unions offer private student loans. Common examples as of late 2025 include Citizens Bank, Sallie Mae, College Ave, SoFi, and others. Not every bank offers student loans; always check current product availability directly with institutions or your school’s financial aid office.
How do private student loans differ from federal loans?
- Private student loans are generally credit-based, may require cosigners, offer fewer borrower protections, and have variable or fixed rates set by lender discretion. Federal student loans have government-set, fixed rates and comprehensive repayment and forgiveness options.
Can I get a private student loan without a cosigner?
- Some banks and lenders will underwrite private loans for students with established credit histories (rare for undergraduates), but most require a cosigner to secure approval and competitive rates. Some lenders offer cosigner release after meeting payment milestones—review each lender’s policy in detail.
Are private student loan rates higher or lower than federal loan rates?
- Rates vary with creditworthiness and market conditions. In some conditions, well-qualified borrowers may find rates competitive with federal loans; for others, private loans may be higher. Compare current official loan disclosures before making a decision.
How do I apply for a private student loan?
- Submit an application (often online) directly through the lender’s official portal. Most lenders require school certification, a credit review, and documentation for the borrower and cosigner. Funds are usually sent to the school for tuition and fees.
Do private student loans offer repayment flexibility?
- Private lenders may offer some flexibility in repayment (such as temporary forbearance), but they generally lack the full suite of income-driven repayment and forgiveness options available with federal programs. Confirm lender-specific policies before borrowing.
Conclusion & Next Steps
- Before pursuing a private student loan, always exhaust scholarships, grants, work-study, and federal loan programs such as Direct Subsidized, Unsubsidized, or PLUS loans; review federal program details at the Federal Student Aid homepage.
- If you require additional funds, research which banks and credit unions offer private student loans, review published rates and terms, consult school financial aid officers, and confirm all application steps and eligibility requirements on each lender’s official portal.
- Compare offers, read all disclosures, and consider both current and future repayment obligations diligently. Policies, rates, and programs change frequently—always verify on official sources before applying.