Private Student Loan Rates: August 26, 2025—Loan Rates Start To Increase

The average interest rate on 10-year fixed-rate private student loans moved up last week. For borrowers pursuing private loans to fill in gaps to pay for higher education expenses, rates remain relatively low for borrowers with solid credit.

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Current Interest Rates for Private Student Loans

From August 18 to August 23, the average fixed interest rate on a 10-year private student loan was 7.35% for borrowers with a credit score of 720 or higher who prequalified on Credible.com’s student loan marketplace. On a five-year variable-rate loan, the average interest rate was 9.46% among the same population, according to Credible.com.

These rates are accurate as of the week of August 18, 2025.

Related: Best Private Student Loans

Fixed-Rate Loans

The average fixed rate on 10-year loans last week climbed by 0.21 percentage point to 7.35%. The week prior, the average stood at 7.14%.

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 7.63%, 0.28 percentage point higher than today’s rate.

A borrower who finances $20,000 in private student loans at today’s average fixed rate would pay around $236 per month and approximately $8,301 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable-Rate Loans

Average variable rates on five-year loans moved even lower last week to 9.46% on average from 10.74%.

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.

Financing a $20,000 five-year private loan at 9.46% would yield a monthly payment of approximately $420. A borrower would pay $5,179 in total interest over the life of the loan. Keep in mind that since the interest rate is variable, it could change monthly.

Getting a Private Student Loan

Before you look to a private student loan, consider a federal student loan as your first option. The interest rates on federal student loans are generally lower. Federal student loans also tend to have far more generous repayment and forgiveness options. Yet, if you’ve reached the borrowing limits for federal student loans or if you’re ineligible for them, private student loans can be a good solution.

To get a private student loan, you’ll generally need to apply directly through a non-federal lender. You can find private student loans through banks, credit unions and online entities. Nonprofit organizations, state agencies and colleges also offer loans.

If you’re an undergraduate with limited credit history, you’ll generally need to apply with a co-signer who can meet the lender’s borrowing requirements.

When applying for a private student loan, take into consideration the following:

  • Your qualifications. Private student loans are credit-based. Lenders typically require a credit score in the higher 600s. This is where having a co-signer can be particularly beneficial.
  • Where to apply. You can apply directly on the lender’s website, via mail or over the phone.
  • Your options. Look at what each lender offers and compare the interest rate, term, future monthly payment, origination fee and late fee. Also, check to see if the lender offers a co-signer release so that the co-borrower can eventually come off of the loan.

Comparing Private Student Loans

The first step in finding the best private student loan is to take a look at the loan’s overall cost. Consider both interest rate and fees. Also, look at the type of help each lender offers if you’re not able to afford your payments.

Keep in mind that the best rates are only available to those with good or excellent credit.

How much should you borrow? Experts generally recommend borrowing no more than you’ll earn in your first year out of college. How much can you borrow? Some lenders cap the amount you can borrow each year, while others don’t. When you’re shopping around for a loan, talk to lenders about how the loan is disbursed and what costs it will cover.

Federal Student Loan Interest Rates

If you need to borrow for school, federal student loans are generally the best option. This is because federal loans offer various borrower protections, such as access to income-driven repayment plans and student loan forgiveness programs. Additionally, most federal loans don’t require a credit check or co-signer.

The Rate You’ll Receive

The rate you receive depends on whether you’re getting a fixed or variable loan. Rates, in part, are based on your credit profile. Those with higher credit scores often get the lowest rates. But your rate is based on other factors as well. Income and even the degree you’re working on and your career can play a part.

Know the Benefits of Private Student Loans

While private student loans shouldn’t necessarily be your first financial aid option, they can come with a variety of benefits, including the following:

  • You can often borrow as much as you need. Some private lenders let you borrow up to your school-certified cost of attendance, minus any previously awarded financial aid.
  • You might not have to pay fees. The best private lenders don’t charge origination or disbursement fees, so you won’t have extra charges on your loan in addition to interest.
  • Good credit means better interest rates. While your credit score doesn’t matter with most types of federal student loans, it does impact private borrowing. Lenders often offer competitive rates to borrowers with excellent credit or a creditworthy co-signer.
  • It’s easy to apply online. Applying for a private student loan is often a quick online process that you can do at any time throughout the school year. Many lenders also let you prequalify for loans online, making it easy to shop around and compare offers from multiple banks.
  • International students may be eligible. Some lenders provide loans for international students attending school in the U.S. If you’re an international student, you may have to apply with a U.S.-based co-signer to qualify.
  • Your lender may offer useful perks. Depending on the lender, you may qualify for some, from interest rate discounts to cash-back bonuses. Some offer a range of repayment terms, lengthy grace periods, forbearance and deferment options and other borrower protections.

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