Set yourself up for success with our student loan guide
From understanding how student loans work to managing repayment with ease, this guide gives you the tools to borrow wisely and confidently.
Understanding private student loans
Private student loans are credit-based loans offered by private lenders who will check your creditworthiness before approving a loan. They help cover college costs—like tuition, fees, supplies, living expenses, or a laptopfootnote 1—when scholarships, savings, grants, and federal aid aren’t enough.
The borrower is responsible for paying back the principal (original amount borrowed) plus interest (what you’re charged to borrow money), which increases the total loan cost over time. Because many students haven’t had the opportunity to build a good credit history yet, a cosigner can help them get approved. If you have a cosigner, they are equally responsible for the loan.
How do private student loans work?
Learn how private student loans differ from federal loans—and what to consider before borrowing.
Need help with student loan jargon? We’ve broken down key terms you should know.
What are interest rates?
Find out what fixed and variable interest rates are, the pros and cons of each, and how your interest rate affects your payments.
Pro tip: Any unpaid interest you have gets added to your total loan cost (capitalizes), making you pay more than the principal (original) amount.
How do you apply for a private student loan?
If you’re ready to apply, we make it easy with a quick, online application. This video walks you through every step—from eligibility and credit checks to choosing an interest rate and repayment option.
What types of Sallie Mae private student loans can you choose?
Undergraduate student loans
For bachelor's and associate degrees, plus certificates from degree-granting schools.
Graduate student loans
For graduate degrees and other master’s and doctorate programs.
Career training student loans
For professional training or certificate courses like culinary, aviation, technical, and more.
Explore all private student loans to choose the best way for you to pay for school
Comparing federal and private student loans
Federal vs. private student loans
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Federal Direct student loansfootnote 2 |
Private student loan |
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FAFSA® required to apply |
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Requires applying directly with a bank or credit union |
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Considers credit history |
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Often allows borrowing up to cost of attendance (COA) less financial aid received |
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Cosigners may help increase chances of approval |
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Made to students based on financial need |
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Allows change in repayment plan after borrowing |
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What are subsidized and unsubsidized loans?
Subsidized student loans are for undergraduate students who show financial need. The government pays the interest while you're in school, during your grace period after graduation, and if you defer the loan. This means your loan balance doesn’t grow during those times, helping you save money. You apply through the FAFSA®, and for loans given between July 1, 2024, and July 1, 2025, the interest rate is 6.53%.
Unsubsidized loans are for both undergraduate and graduate students, and you don’t need to show financial need. However, you’re responsible for all the interest from the moment the loan is sent to your school—even while you’re still studying. These loans can cost more over time, but they let you borrow more and can be used for graduate school. Both types of loans are part of your financial aid offer after you submit the FAFSA®.
Before you borrow
Borrowing smart starts before applying for a loan. Your college planning choices—like where you apply, how you compare costs, and your payment plans—affect how much debt you’ll take on. Before you borrow, it’s important to understand your costs, minimize scholarships and grants, and use tools to help you make informed decisions. If a private student loan is right for you, you’ll want to review your free annual credit report, since your creditworthiness affects loan terms like interest rates and borrowing limits. Paying bills on time can help build a strong score and unlock better borrowing opportunities.
Choose the right school for you
Use college search tools, like ScoutSM College Search, to compare schools by cost, location, majors, and more.
Pro tip: In-state schools and community colleges may offer a lower ticket price.
Start with free money
Use Scholly® Scholarships to find and apply for scholarships tailored to you.
Submit the FAFSA® to find out if you’re eligible for grants, that’s financial aid that doesn’t have to be paid back.
Estimate the cost of attendance
Your school’s cost of attendance is usually found on your financial aid award letter or the school’s website.
Once you’ve got an estimated amount, you can figure out how much you’ll need to pay for school.
More resources
We’ve got the resources you need to make a plan to pay. If you still need more money, a private student loan may help. You’ll want to make sure you find the best student loan option for your goals.
How much should you borrow?
If you’re considering a private student loan, you want to borrow only what’s needed, so you’re not stuck with more debt than you can handle after graduation. Think about what your future income might look like and how much you’ll be able to afford in monthly loan payments.
To figure out how much to borrow, start by estimating the total cost of attendance (COA), usually found on your financial aid offer letter or the school’s website. It includes costs from tuition and fees to housing and books. Most schools will certify your loan amount to make sure you don’t borrow more than the COA.
Once you have an estimate, subtract any savings, scholarships, grants, work-study, and federal loans. What’s left is the amount you still need for school.
Smart ways to prep for repayment
Estimate your payments
Use a student loan calculator to see what your principal and interest payments may look like each month.
Make in-school payments
Lower your total loan cost with interest-only or fixed payments while you’re in school or during your grace period to ease the transition to full repayment.
Consider future income
Loan payments don’t wait, so it’s smart to start thinking about landing that job and what your future income might look like.
Going into a trade? Check out some of the highest paying trade jobs in 2025.
How to budget for student loan payments
Budgeting helps you stay in control of your money and avoid missing payments. To budget for student loan payments, start by getting organized—list out your income, monthly expenses, debts—student loans, credit cards, car payments, and more. Use this to build a budget for smarter money habits and manage your debt with confidence. Automate payments when possible to stay on track and avoid late fees.
Your repayment options
When you take out a Sallie Mae® private student loan, you get to choose how you want to handle your payments while in school. Your repayment option affects your monthly payments and total loan cost.
- Interest-only repayment: Make interest-only payments while you’re in school and during your grace period.
- Fixed repayment: Pay a set amount each month you’re in school and during your grace period.
- Deferred repayment: Make no payments while you’re in school and during your grace period.
Repayment support for life after school
Grace period
Your student loan grace period, typically six months after graduation, is a chance to get ready for payments—review your loan details, estimate monthly costs, and build a budget. Making small payments early can lower interest, and auto-pay may get you a discount. Stay in touch with your loan servicer so you’re set when repayment begins.
Graduated Repayment Period
The Graduated Repayment Period lets you pay just the interest for 12 months after your grace period, easing the transition into full repayment. While it offers short-term relief, it may increase your total loan cost over time.
Deferment and forbearance
Deferment and forbearance let you pause or temporarily lower student loan payments. If you’re going back to school, you may be able to defer your payments while you’re enrolled at least half-time. Forbearance can give you breathing room if you’re experiencing financial hardships. Both offer short-term relief, but keep in mind that interest keeps growing, increasing your total loan cost.
Debt repayment strategies
Create a budget
Not sure where to start? Here’s what your monthly budget could look like with the 50/30/20 rule.
- 50% for essentials, like rent, groceries, and transportation
- 30% for wants, like dining out or entertainment
- 20% for savings and debt repayment
If you’re just starting out or have student loan payments, this split might not be perfect—but it’s a good a way to manage your spending habits.
Choose a payoff method
There are two popular ways to tackle debt. Choose the one that keeps you motivated.
- Snowball method: Pay off the smallest debt first for quick wins
- Avalanche method: Start with the highest-interest debt first to save more over time.
Build an emergency fund
Saving up before you tackle your debt is a smart move. Life happens—car repairs, medical bills, surprise expenses—and without a cushion, you could end up in deeper debt. Something like a high-yield savings account or money market account works great for an emergency fund.
Need help repaying?
If you ever have trouble making payments, reach out to your lender early to avoid any consequences. Missing payments leads to delinquency, which can cause late fees, credit damage, and loss of benefits. If the loan defaults, the full balance becomes due immediately.
You have options to make payments more manageable.
Consolidation simplifies things by combining multiple loans into one, while refinancing replaces your loans with a new one—often to get a lower interest rate or better terms.
If you need help with federal student loan payments, you may qualify for loan forgiveness through federal programs—like Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness (TLF), Total and Permanent Disability (TPD), and Income-Based Repayment—that can cancel out your loans after meeting certain requirements.footnote 3 Compare your options at studentaid.gov.
Think about what’s next
Open a Sallie Mae® savings account
From a high-yield savings account and money market account to certificate of deposits and goal-based savings, our savings products make it easy for you to grow your money at competitive rates. .
Build credit early
If you have a Sallie Mae private student loan, you may be able to check your FICO® Score for free each month and get helpful tips to understand what affects it.footnote 4 A strong credit score makes it easier to get loans, rent an apartment, and get better interest rates.
Stay on top of your loan
Set up automatic payments to avoid missed payments and build credit with on-time payments. Stay in touch with your loan servicer to stay up to date on your loan details. If you qualify, you may want to consider refinancing which could get you a lower interest rate.
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