Private Student Loan
A student loan issued by a bank, credit union, or online lender, typically with variable interest rates and fewer borrower protections than federal loans.
Detailed Explanation
Private student loans fill the gap when federal aid, scholarships, and grants do not cover the full cost of attendance. Unlike federal loans, private loan terms vary widely between lenders: interest rates may be fixed or variable, often based on the borrower's credit score and income. Most undergraduate borrowers need a creditworthy cosigner to qualify. Private loans generally lack the safety net features of federal loans, including income-driven repayment plans, deferment during economic hardship, and forgiveness programs. Repayment terms typically range from 5 to 20 years. Some lenders offer in-school deferment, but interest accrues during this period and capitalizes upon entering repayment. Because private loans carry higher long-term risk, financial advisors recommend exhausting federal loan eligibility first. The Consumer Financial Protection Bureau tracks complaints about private student loan servicers and publishes annual reports on the private lending market.
Related Terms
Student Loan
Money borrowed to pay for college tuition, room, board, and related expenses that must be repaid with interest after leaving school.
Federal Student Loan
A student loan funded by the U.S. Department of Education with fixed interest rates, flexible repayment options, and potential forgiveness programs.
Cost of Attendance (COA)
The total estimated cost for a student to attend a school for one academic year, including tuition, fees, room, board, books, transportation, and personal expenses.
Source: U.S. Department of Education College Scorecard, 2026.
Frequently Asked Questions
What is private student loan?
A student loan issued by a bank, credit union, or online lender, typically with variable interest rates and fewer borrower protections than federal loans.
Why does private student loan matter for college ROI?
Private student loans fill the gap when federal aid, scholarships, and grants do not cover the full cost of attendance. Unlike federal loans, private loan terms vary widely between lenders: interest rates may be fixed or variable, often based on the borrower's credit score and income. Most undergraduate borrowers need a creditworthy cosigner to qualify.
this entity is one of the U.S. college cost, debt, and post-graduation earnings concepts that recurs across this site. The definition above is the technical answer; the paragraphs below add the practical context for how the concept connects to the the U.S. Department of Education College Scorecard data behind every per-entity page on the site.
In the the U.S. Department of Education College Scorecard data, this concept shapes one or more of the fields that drive the per-entity grades and rankings on this site. The methodology page describes which fields feed into which output; this glossary entry documents the underlying term.