Rates on 10-year fixed-rate private student loans rose last week. If you’re interested in picking up a private student loan, you can still get a relatively low rate.
The average fixed interest rate on a 10-year private student loan was 7.54% from February 17 to February 22. That’s for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace. The average interest rate on a five-year variable-rate loan was 9.81% among the same population, according to Credible.com.
These rates are accurate as of February 24, 2025.
Related: Best Private Student Loans
Fixed-Rate Loans
The average fixed rate on 10-year loans last week rose by 1.08% to 7.54%. The week prior, the average stood at 6.46%.
Borrowers currently in the market for a private student loan will receive a lower rate than they would have at this time last year. At this time last year, the average fixed rate on a 10-year loan was 8.15%, 0.61% higher than today’s rate.
Let’s say you financed $20,000 in student loans at today’s average fixed rate. You’d pay around $238 per month and approximately $8,539 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.
Variable-Rate Loans
Last week, rates on variable five-year student loans moved up, reaching 9.81% from 6.90% the week prior.
In contrast to fixed rates, variable interest rates fluctuate over the course of a loan term. Variable rates may start lower than fixed rates, especially during periods when rates are low overall, but they can rise over time.
Private lenders often offer borrowers the option to choose between fixed and variable interest rates. Fixed rates may be the safer bet for the average student, but if your income is stable and you plan to pay off your loan quickly, it could be beneficial to choose a variable loan.
If you were to finance a $20,000 five-year loan at a variable interest rate of 9.81%, you’d pay approximately $423 on average per month. In total interest over the life of the loan, you’d pay around $5,384. Of course, since the interest rate is variable, it could fluctuate up or down from month to month.
Related: How To Get A Private Student Loan
Know the Benefits of Private Student Loans
There are several advantages to private student loans, including:
- Competitive interest rates.
Many private lenders offer competitive interest rates, especially if you have excellent credit or a creditworthy co-signer. - Low or no fees.
The best private student loans don’t charge an origination fee, unlike federal Direct loans, which charge a loan disbursement fee. Some private lenders don’t even charge fees for late payments. - High loan amounts.
Depending on the lender, you may be able to borrow up to your school’s total cost of attendance minus any previously awarded financial aid. - Grace period.
Some private lenders let you defer payments while you’re in school and for a few months after graduation. Some grace periods last up to nine months after graduation. - Easy online application process.
It’s easy to apply for a private student loan online in just a few steps. Some lenders also let you check your rates through prequalification, allowing you to compare offers without dinging your credit score. - Bonus perks, depending on the lender.
Some lenders offer additional borrower benefits, such as financial counseling, career services, deferment and forbearance or cash-back rewards for graduating or getting good grades. - Availability to international students.
International students are not eligible for federal financial aid from the U.S. Department of Education, but they may qualify for a private student loan to pay for school.
Who Is Eligible for a Student Loan?
Specific student loan requirements will vary by lender, but you typically need to be a U.S. citizen or qualifying non-citizen who meets the average age requirement in your state. Make sure you’re enrolled in or planning to enroll in an eligible program at a qualifying institution.
Moreover, you must meet the lender’s credit, income and debt-to-income ratio requirements. Most lenders look for a good credit score of 670 or higher, though specific requirements vary.
Some lenders require or prefer that you apply with a co-signer. A co-signer is a parent or a trusted adult who agrees to repay the loan if you miss payments. Some lenders allow a co-signer release after a certain period of on-time payments.
More From Advisor
- Private Student Loan Rates: January 7, 2025—Loan Rates Drop
- Private Student Loan Rates: December 3, 2024—Loan Rates Move Down
- Student Loan Refinance Rates: November 26, 2024—10-Year Loan Rates Don’t Move
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