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The cost of college continues to rise. The average full cost of attending college in 2025-26 was $30,990 for in-state students attending a public institution, $50,920 for out-of-state students at a public institution, and $65,470 at private colleges, according to the College Board While grants and scholarships can significantly reduce your out-of-pocket expenses, they typically don’t cover the full cost of your college education.

Student loans can help bridge that funding gap. Federal student loans are generally the best place to start because they offer fixed interest rates, flexible repayment options, and borrower protections that private loans typically don’t provide. However, federal loans also come with borrowing limits. If you still need additional funding after exhausting your federal aid options, private student loans may help cover the remaining costs.

This guide explains how private student loans work, their advantages and disadvantages, and what to consider before applying.

What Is a Private Student Loan?

A private student loan is an educational loan issued by a private lender, such as a bank, credit union, or online lender, rather than the federal government. Students often use private student loans when financial aid, savings, and federal student loans aren’t enough to cover the total cost of attendance.

Funds from a private school loan can typically be used for tuition, fees, housing, meal plans, transportation, books, and other education-related costs. Interest rates may be variable or fixed and are determined by the lender.

Borrowers typically must pass a credit check to qualify for private student loans. Since many students have limited credit histories, applying with a creditworthy cosigner is often necessary to qualify for competitive rates and terms.

How Do Private Student Loans Work?

Loan amounts, interest rates, repayment terms, and eligibility requirements vary by lender. If you’re considering a private student loan, it’s important to compare your multiple lenders to find the best fit for your financial situation.

To get a private student loan, you’ll submit an application directly with your chosen lender. The lender will review your credit profile, income, and other financial information to determine whether you qualify and what rates and terms you’ll receive.

LIke federal unsubsidized loans, private student loans generally begin accruing interest as soon as funds are disbursed. If you don’t make interest payments while you’re in school, the unpaid interest may capitalize, meaning it gets added to your principal balance. Future interest is then calculated on the higher balance.

Interest Rates: Fixed vs Variable

Many private student loan lenders offer both fixed-rate and variable-rate options:

•   Fixed rate loans maintain the same interest rate throughout the life of the loan, resulting in predictable monthly payments. This can make budgeting easier and protects borrowers from future rate increases.

•   Variable rates have interest rates that can change over time based on market conditions. While variable rates may start lower than fixed rates, they may increase or decrease during repayment, causing monthly payments to fluctuate.

Federal student loans, by comparison, only offer fixed interest rates.

Repayment Terms and Disbursement

If you’re approved for a private student loan, the lender typically sends the funds directly to your school. The school applies the money toward tuition, fees, room and board, and other charges. Any remaining funds are refunded to you for additional education-related costs, such as textbooks, transportation, or supplies. Repayment terms vary by lender and commonly range from five to 20 years. Many lenders also allow borrowers to choose among several repayment options while enrolled in school:

•   Interest-only repayment: You make payments toward accrued interest while in school. This can reduce the total amount repaid over the life of the loan.

•   Immediate repayment: You begin making full principal-and-interest payments right away. This option generally results in the lowest overall borrowing cost.

•   Deferred repayment: You postpone payments until after graduation, leaving school, or dropping below half-time enrollment. Because interest continues to accrue during the deferment period, this option usually results in the highest total borrowing cost.

The Pros and Cons of Private Student Loans

If federal financial aid isn’t enough to cover your educational expenses, private student loans can help fill the gap. However, it’s important to understand both the benefits and drawbacks before borrowing.

Pros of Private Student Loans	Cons of Private Student Loans
Apply any time of the year	May have higher interest rates
Higher borrowing limits	No access to federal forgiveness programs
Potentially lower rates for highly qualified borrowers	No federal interest subsidies
Fast application process	Risk of overborrowing
Options for international students	May require a cosigner

Benefits of Private Student Loans

Here’s a look at some of the advantages that come with private student loans.

Apply Any Time of the Year

Unlike federal student loans, which require students to submit the Free Application for Federal Student Aid (FAFSA^®) annually, private student loans can be applied for throughout the year. This flexibility can be helpful if you experience an unexpected funding gap or your educational expenses increase after the academic year begins.

Higher Loan Amounts

Federal student loans have annual and lifetime borrowing limits. For example, a first-year, dependent undergraduate can borrow up to $5,500 for that year. The aggregate max a dependent student can borrow for their undergraduate education is $31,000. Private student loan limits vary with each lender, but you can typically borrow up to the full cost of attendance each year, minus any financial aid received.

May Offer Lower Rates for Highly Qualified Borrowers

Federal student loans offer fixed rates set by Congress, currently ranging from 6.39% to 8.94% depending on your degree level and type of loan. Private student loan rates vary based on creditworthiness, with some starting just under 3.00% for exceptional credit. Federal student loans also charge an upfront fee (called an origination fee), while many private lenders do not. Keep in mind, however, that APRs on private loans vary widely and can reach 18% (or more) for borrowers with limited credit history.

Faster Application and Approval Process

Unlike federal student loans, private student loans don’t require completion of the FAFSA. Many lenders allow borrowers to apply online in just a few minutes.

Some lenders provide preliminary lending decisions within just a few minutes, though final approval and school certification may take several days. This can make private student loans a useful option when unexpected educational expenses arise.

Options for International Students

International students generally don’t qualify for federal student aid. Some private lenders offer student loans to eligible non-U.S. citizens who meet specific criteria, such as attending an approved school and applying with a qualified U.S.-based cosigner.

Disadvantages of Private Student Loans

Private student loans also have some downsides. Here are some to keep in mind.

Potentially Higher Interest Rates

Private lenders base interest rates on creditworthiness. Students with limited credit history may receive rates that are significantly higher than federal student loan rates. Federal loans provide the same interest rate to all eligible borrowers regardless of credit score.

Not Eligible for Federal Protections

Federal loans offer benefits such as income-driven repayment, loan forgiveness programs, and certain hardship protections. Private lenders generally do not provide the same level of borrower assistance.

No Federal Subsidy

Federal Direct Subsidized Loans, which are awarded to undergraduate students who demonstrate financial need, cover your interest while you are in school and for six months after you graduate. Private loans are unsubsidized, meaning that interest starts accruing immediately, which can significantly increase costs.

Risk of Overborrowing

Private lenders may allow students to borrow up to their full cost of attendance, minus financial aid. While this can be helpful, borrowing more than necessary increases both the total interest paid and the size of future monthly payments.

May Require a Cosigner

Because many students have limited income and credit history, a cosigner is often needed to qualify for a private student loan. A cosigner shares legal responsibility for repayment and may be affected if payments are missed.

Some lenders offer cosigner release programs that allow borrowers to remove the cosigner after meeting certain repayment requirements.

Recommended: Getting a Student Loan Without a Cosigner

Federal vs Private Student Loans

Here’s a closer look at some of the major differences between federal vs. private student loans.

Application Process

Federal student loans require students to complete the FAFSA each year. Eligibility is generally not based on credit history.

Private student loans require borrowers to apply directly through a lender. Typically, lenders perform a credit check and evaluate factors such as income and creditworthiness.

Recommended: Refinancing Student Loans With a Cosigner

Interest Rates

Federal student loan rates are fixed and set annually by federal law.

Private lenders establish their own rates, which may be fixed or variable. Rates depend on factors such as credit score income, loan amount, repayment term, and whether a cosigner (such as a parent) is included.

Repayment Plans

Borrowers who take out federal student loans on or after July 1, 2026 will have access to two repayment plans:

•   The Repayment Assistance Plan (RAP): This is an income-driven plan charging 1% to 10% of your adjusted gross income (AGI), spanning 30 years before forgiveness.

•   Tiered Standard Plan: This is a fixed-rate plan with terms spanning 10 to 25 years, determined by how much you borrowed.

Repayment plans for private loans are set by the individual lender. They can span from five to 20 years and typically don’t include an income-based option.

Deferment or Forbearance

Federal borrowers may qualify for forbearance during periods of financial hardship. Some private lenders also offer temporary hardship assistance, including deferment, forbearance, or reduced-payment programs. Availability varies by lender.

Loan Forgiveness

Borrowers with federal student loans may qualify for forgiveness programs such as Public Student Loan Forgiveness (PSLF), Teacher Loan Forgiveness, or after paying down their balances on an income-driven plan for a certain period of time.

Private student loans generally are not eligible for federal forgiveness programs. While some lenders may offer hardship assistance, permanent loan forgiveness is uncommon.

Should You Consider Private Student Loans?

Private student loans can be a useful tool when scholarships, grants, savings, and federal student aid aren’t enough to cover the cost of college. They may also be a practical option for international students.

However, students will generally want to consider federal student loans first because they offer valuable benefits, including income-driven repayment and potential forgiveness opportunities.

If you decide to borrow from a private lender, it’s wise to compare multiple lenders, review rates and repayment options carefully, and borrow only what you need to help ensure you can comfortably manage repayment.

You might also consider refinancing student loans in the future if doing so lowers your interest rate. Refinancing also allows you to combine federal and private student loans into a single loan with one monthly payment. Just keep in mind that refinancing federal loans with a private lender means giving up federal protections and benefits.

How to Get a Private Student Loan

Here’s a look at the steps involved in getting a private student loan.

1.    Shop around. Compare multiple lenders and evaluate factors such as interest rates, loan limits, repayment terms, fees, borrower protections, and hardship assistance tools.

2.    Check for prequalification. Some lenders allow borrowers to prequalify with a soft credit inquiry that won’t affect their credit score. This can provide an estimate of the rates and terms you may qualify for and let you know if you need to ask someone to cosign your loan.

3.    Gather required documents. You’ll typically need personal identification, proof of income, school enrollment details, and potentially financial information from a cosigner.

4.    Submit your application. Once your application is submitted, the lender reviews your information and verifies enrollment with your school. If approved, the lender coordinates disbursement with the institution.

Does Everyone Get Approved for Private Student Loans?

No. Approval depends on factors such as:

•   Credit history

•   Credit score

•   Income and employment status

•   Debt-to-income ratio

•   Cosigner qualifications

•   Enrollment at an eligible institution

If you don’t meet a lender’s requirements on your own, applying with a qualified cosigner may improve your chances of approval.

The Takeaway

Private student loans can help bridge funding gaps when scholarships, grants, savings, and federal student aid aren’t enough to cover the cost of college. While they often offer higher borrowing limits and may provide competitive rates for borrowers with strong credit, they lack many of the protections available through federal student loans.

Often the best approach is to exhaust grants, scholarships, and federal student loan options before considering private student loans. If a private loan is necessary, compare lenders carefully and borrow only what you need to keep future repayment manageable.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Why would someone get a private student loan?

Private student loans are commonly used when federal financial aid, scholarships, grants, and personal savings don’t fully cover educational expenses. They can also help students who need funding beyond federal borrowing limits or who don’t qualify for federal aid.

Will private student loans be forgiven?

Private student loans aren’t funded by the government, so they don’t offer the same forgiveness programs. In fact, private student loan forgiveness is rare.

If you experience financial hardship, however, many lenders will work with you to stay out of default. They may agree to temporarily lower your payments, waive a payment, or switch to interest-only payments. Or, you might qualify for deferment or forbearance, which temporarily postpones your payments (though interest typically continues to accrue).

Are private student loans paid to you or the school?

Private student loans are typically disbursed directly to the school. After tuition, fees, and other charges are paid, any remaining funds are then refunded to the student for qualified educational expenses.

What credit score do you need for a private student loan?

Private student loan qualification requirements vary widely, but many lenders require a minimum FICO^® score of 640 for approval. Because private loans are credit-based, a higher credit score typically yields a significantly lower interest rate. If you have poor credit or a thin credit history, you will likely need a creditworthy cosigner.

What is the difference between a private student loan and a federal student loan?

Federal student loans are funded directly by the government, while private student loans are issued by banks, credit unions, or online lenders. Federal options provide benefits like subsidies, income-driven repayment, and forgiveness programs that private lenders rarely match. However, federal loans have strict annual borrowing limits, while private loans often allow you to borrow up to your school’s total cost of attendance.

Experts generally recommend using private student loans only after all financial aid, including federal student loans, has been exhausted.

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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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There are approximately 63 million family caregivers in the U.S. While caregiving is a labor of love, it can also involve some serious financial challenges. You might have to take time away from your job to care for your loved one, for instance, making it hard to pay your bills and student loans.

Fortunately, there are options that can help, including student loan forgiveness for caregivers. Read on to learn about ways to manage your student loans and get some debt relief.

Managing Student Loans as a Caregiver

Juggling student loan payments and other expenses with caregiving responsibilities can be difficult. In a 2024 survey conducted by S&P Global and AARP, 27% of participants reported they shifted from full-time to part-time work or reduced their hours to meet their caregiving responsibilities. On top of a possible loss of income, many family caregivers spend money to help their loved ones. According to a 2026 U.S. News survey, roughly a quarter of caregivers pay more than $5,000 in out-of-pocket caregiving-related expenses annually.

To avoid missing payments and defaulting on their loans, caregivers who are struggling to make federal student loan payments can seek help by contacting their loan servicer and exploring student loan repayment options and forgiveness programs. Federal loan default occurs when you fail to make your scheduled loan payments for at least 270 days. If you go into default, you could suffer credit damage, wage garnishment, and have your tax refunds withheld.

For private student loans, you can contact your lender directly to see how they might be able to help. While private student loan forgiveness options are usually not available, there may be other types of loan modifications the lender might be willing to make.

Another option you may want to consider is to refinance your student loans. If you can qualify for more favorable rates and terms, that might make repayment easier.

Recommended: Student Debt Guide

Forgiveness Programs to Explore

Caregivers may be able to qualify for federal or state forgiveness programs that forgive or cancel the remaining balance of their student loans after a certain amount of time and other specific requirements are met. Here are some forgiveness programs to look into.

Public Service Loan Forgiveness (PSLF): PSLF forgives the remaining balance on your federal Direct loans if you’re employed full-time by the government or a not-for-profit organization. To qualify, you need to repay your loans under an income-driven repayment plan or a 10-year standard repayment plan. You must make a total of 120 qualifying monthly payments.

In 2021, and again in 2023, a bill was introduced in Congress to make primary family caregivers for military veterans eligible for PSLF by expanding the definition of “public service job.” The bill has not progressed since its reintroduction in 2023, but you may want to keep tabs on it if it applies to your caregiving situation.

Income-Driven Repayment (IDR): IDR offers a pathway to forgiveness. These plans base your monthly student loan payment amount on a percentage of your discretionary income and family size. If you repay your loans under an IDR plan, any remaining balance may be forgiven after 20 or 25 years.

State-specific forgiveness programs: A number of states offer student loan forgiveness programs, and yours may be one of them. For instance, your state may offer forgiveness programs to help certain individuals — particularly those in high-need locations and working in high-need occupations like health care and teaching — pay off some or all of their student loans. Some of these programs forgive both federal and private student loans. Check with your state department of education for more information about these opportunities.

Recommended: Student Loan Forgiveness Guide

Application Process and Documentation

To apply for Public Service Loan Forgiveness, you’ll need to submit a PSLF form by taking the following steps:

1.    Make sure you qualify. To be eligible for PSLF, you must have federal Direct subsidized or unsubsidized loans, Direct PLUS loans, or Direct consolidated loans. You must also work full-time for a qualifying employer and be on an IDR plan.

2.    Sign up for an IDR plan if you are not already on one. You can sign up at StudentAid.gov. You’ll need a Federal Student Aid (FSA) ID, as well as documentation such as financial information, tax forms, your mailing address, phone number, and email address.

3.    Verify that your employer qualifies you for PSLF. The easiest way to do this is to use the PSLF Help Tool. This allows you to see if your employer is in the Department of Education’s database. If they aren’t, you can request that your employer’s eligibility be reviewed.

4.    Send the PSLF form to your employer to sign and certify.

5.    Sign and submit the fully completed PSLF form.

You’ll need to recertify your employment every year and any time you change jobs to continue to qualify for PSLF.

To apply for state-specific student loan forgiveness, follow the application steps outlined by each plan or program.

Alternatives to Forgiveness for Caregivers

Aside from caregiver student loan forgiveness, there are several other ways to get student loan debt relief. Here are three options to consider.

Deferment: In certain circumstances, including financial hardship, student loan deferment allows you to stop or reduce your payments on your federal student loans for up to three years if you qualify. If you have a subsidized federal loan, interest does not accrue during the deferment period. If you have an unsubsidized federal loan, interest will continue to accrue.

You need to apply for deferment. First, identify the type of deferment you’re requesting, such as economic hardship deferment (though note that economic hardship deferments will be eliminated for loans made on or after July 1, 2027). Next, fill out and submit a request form to your student loan servicer along with documentation to show that you’re eligible.

Private student loans may or may not offer deferment. Check with your lender.

Forbearance: Similar to deferment, student loan forbearance lets you temporarily stop or reduce your payments for your federal loans if you qualify. However, with forbearance, interest always accrues on your loans and forbearance periods are typically no longer than 12 months.

There are two types of federal forbearance, general and mandatory. To apply, you must identify which type you’re requesting. For family caregivers, general forbearance is likely the most applicable. You may be eligible for it due to financial difficulties, medical expenses, employment changes, or other reasons acceptable to your loan servicer. (Mandatory forbearance is for those serving in AmeriCorps or the National Guard, in a medical or dental internship or residency, or working as a teacher and qualifying for teacher loan forgiveness.) To apply for forbearance, fill out the form for the type of forbearance you’re requesting and submit it along with documentation showing proof of your financial situation to your loan servicer.

Some private student loans may offer forbearance. Contact your lender to find out.

Student loan refinancing: Another option that might help some family caregivers with their student loans is refinancing. When you refinance, you take out a new loan from a private lender and use it to pay off your existing student loans. The new loan will have a new term and interest rate, which could help some borrowers if they can qualify for a lower rate. Keep in mind, however, that if you extend your loan term to help reduce your monthly payment, you may pay more interest over the life of the loan.

Another important consideration is that if you refinance federal loans, you will no longer qualify for federal benefits, such as deferment or income-driven repayment programs. You’ll want to carefully weigh the pros and cons of refinancing.

The Takeaway

If you’re a family caregiver struggling to repay your student loans, there are options that may give you some relief. You might be eligible for Public Service Loan Forgiveness, a state-specific forgiveness program, or an income-driven repayment plan. You can also consider student loan deferment or forbearance to temporarily stop or reduce your payments, or you could refinance your student loans if you qualify for more favorable rates or terms. Explore all the possibilities to determine which one can give you the help you need.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How long does it take to qualify for loan forgiveness?

It typically takes 10 years to qualify for Public Service Loan Forgiveness (PSLF) because you must make 120 qualifying monthly payments under an income-driven repayment (IDR) plan or the standard repayment plan while working for a qualified employer. At that point, your remaining balance is forgiven. If you instead pursue student loan forgiveness under an IDR plan, it takes 20-25 years to qualify for forgiveness, depending on the plan.

Can part-time caregivers qualify?

If you are a part-time caregiver who has federal Direct student loans and works full-time for a qualifying employer, you may be eligible for Public Service Loan Forgiveness (PSLF). Under PSLF, working full-time means at least 30 hours a week or whatever your employer’s definition of a full-time job is. You could also pursue forgiveness under an income-driven repayment plan, which bases your monthly payment amount on a percentage of your discretionary income and family size.

What types of student loans are eligible for forgiveness?

Federal Direct student loans are eligible for Public Service Loan Forgiveness through income-driven repayment plans or the standard repayment plan. Various types of student loans — including, in some cases, private student loans — may be eligible for forgiveness through state forgiveness programs. Check with your state to find out.

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SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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