Bank Student Loans: Compare Rates and Loan Options

Bank student loans are a type of private student loan offered by privately owned financial institutions. While major national banks have largely moved away from student lending, a few online lenders continue to offer competitive rates and flexible repayment terms.

Before you take out a bank student loan, it's important to understand how they work and compare your options. Here's what you need to know, along with a few lenders worth considering.

Banks that offer student loans

Most major banks, including Wells Fargo, JP Morgan Chase, Bank of America, Citibank, Capital One, Discover, and American Express, do not offer private student loans.

However, you can find student loans from the following banks:

Compare private student loan rates

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best bank student loan lenders, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

• Repayment options: 30%
• Eligibility: 25%
• Interest rates: 20%
• Loan terms: 15%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

Who qualifies for a bank student loan?

To get a bank student loan, you'll need to meet certain requirements the lender sets. These typically include a good credit score, steady income, and enrollment at an eligible school.

In most cases, you'll need a minimum FICO score of 670.

“This is why the majority of student borrowers who take out a private student loan need a cosigner,” says Bethany Hubert, a financial aid specialist at Going Merry by Earnest.

When you apply with a cosigner, the lender considers their credit and income as part of your application. If your cosigner has stronger credit, you'll have a better chance of getting approved and may even qualify for a lower interest rate.

To give you an idea of the rate you might qualify for based on your credit score, see the chart below, which shows the average rates for borrowers with different credit scores who used the Credible marketplace to find a lender.

How to pick the best student loan for you

To find the best student loan for your needs, shop around and compare your options with as many lenders as you can. You'll need to consider several important factors as you do your research, including:

• Interest rate: The interest rate on a loan plays a major role in determining how much you'll pay for it over time. You'll also need to decide whether you'd prefer a fixed or variable rate. A fixed rate will remain the same over the life of your loan, which means your payment won't ever change. A variable rate might be lower in comparison, but it can fluctuate over time.
• Repayment term: The shorter the term, the less you'll pay in interest. Because of this, it's usually a good idea to choose the shortest term you can afford. You can use a student loan repayment calculator to see what your monthly payment will be under different repayment terms.
• Cosigner release: Some lenders allow cosigners to be released from the loan once you've made on-time payments for a certain amount of time. If you'd like to remove your cosigner from the loan in the future, be sure to check whether the lender offers cosigner release.
• Discounts: Depending on the lender, you can take advantage of discounts. For example, many lenders provide rate discounts if you sign up for automatic payments. Other lenders, like SoFi, offer loyalty discounts if you already have an account with them.

Bank loans vs. federal student loans

Federal student loans offer more protections, including income-driven repayment, deferment, and loan forgiveness. That's why most students should use federal loans before considering private loans.

“Private loans offer more options up front while federal loans offer more protection on the back end,” says Jack Wang, a wealth adviser at Innovative Advisory Group who specializes in helping families pay for college.

However, if you or your cosigner have strong credit, a student loan from a bank could provide lower interest rates.

“Students, and potentially with a cosigner, would look at a bank or private lender for a student loan if they have a really good credit profile and do not need the provisions offered by federal student loans,” advises Wang.

“It's worthwhile to do a comparison between the rates, fees, and repayment terms of both programs,” adds Stacey MacPhetres, senior director of education finance for EdAssist by Bright Horizons.

“When considering if a student should borrow their federal student loans first, they should compare their overall costs over the life of the loan to the private loans they are considering,” says MacPhetres.

How to apply for a student loan from a bank

To apply for a bank student loan, you'll need to submit an application directly through the bank's website. Before you start, compare a few lenders to find the best rates, fees, and loan terms.

It's also important to “confirm if the lender's loan limits can cover your education expenses,” says Hubert. She recommends you “review customer feedback to ensure the lender has a reputation for supporting their customers.”

Once you're ready to apply, gather the necessary documents ahead of time.

“Students should gather identity documentation — a driver's license and Social Security card, income documentation for themselves, if applicable — a W-2 and two pay stubs, and let their cosigner know to do the same,” says Sara Parrish, president of CampusDoor, a loan origination platform.

If you're applying with a cosigner, they don't need to be physically present.

“It's OK if the cosigner is not physically sitting with the student. Private lenders make it simple to invite cosigners to complete their part of the application,” Parrish explains.

She adds that after you submit your application, the bank may request copies of your documentation, so be ready to upload those when needed.