Private 10-year fixed-rate student loan rates fell last week. If you want to take out 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 5.78% from May 30 to June 3. This is for borrowers with a credit score of 720 or higher who have prequalified in Credible.com’s student loan marketplace. The average interest rate on a five-year variable-rate loan was 3.45% among the same population, according to Credible.com.

Related: Best Private Student Loans

Fixed rate loans

Last week, the average 10-year fixed rate fell 0.26% to 5.78%. The previous week, the average was 6.04%.

Borrowers looking for a private student loan can now qualify for 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 6.06%, or 0.28% higher than the current rate.

A borrower financing $20,000 in private student loans at today’s average fixed rate would pay about $220 per month and about $6,381 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable rate loans

Last week, the average five-year variable student loan rate fell to 3.45% on average from 4.33%.

Unlike fixed rates, variable interest rates fluctuate over the term of the loan. Variable rates can start lower than fixed rates, especially during times when rates are generally low, but they can increase over time.

Private lenders often offer borrowers the option of choosing between fixed and variable interest rates. Fixed rates may be the safest bet for the average student, but if your income is stable and you plan to pay off your loan quickly, it might be beneficial to choose a variable loan.

Financing a private loan of $20,000 over five years at 3.45% would yield a monthly payment of approximately $363. A borrower would pay $1,803 in total interest over the life of the loan. But the rate in this example is variable and it can go up or down each month.

Related: How to get a private student loan

How to Compare Private Student Loans

When comparing private student loan options, take a close look at the overall cost of the loan. This includes the interest rate and fees. It’s also important to consider the type of help the lender offers if you can’t afford your payments.

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

Experts generally recommend that you don’t borrow more than you will earn in your first year of college. While some lenders cap the amount of money you can borrow each year, others don’t. When comparing loans, determine how the loan will be disbursed and what costs it will cover.

Get a private student loan

If you meet the annual borrowing limits for federal student loans or don’t qualify, private student loans may be a good choice. But consider a federal student loan as your first option since interest rates are generally lower. For example, the federal student loan interest rate for undergraduates is 3.73% for the 2021-22 school year. You will also benefit from more liberal repayment and forgiveness options with federal student loans.

To obtain a private student loan, you will usually need to apply directly with a non-federal lender. You can find private student loans from banks, credit unions, and online entities. Nonprofit organizations, state agencies, and colleges also offer loans.

If you are an undergraduate student with a limited credit history, you will usually need to apply with a co-signer who can meet the borrowing requirements of the lender.

Here’s what to consider when applying for a private student loan:

• Make sure you qualify.Private student loans are credit-based, and lenders typically require a credit score over 600. That’s why having a co-signer can be especially beneficial.
• Apply directly through lenders.You can apply directly on the lender’s website, by mail or by phone.
• Compare your options.Look at what each lender offers and compare the interest rate, term, future monthly payment, origination fees and late fees. Also check to see if the lender offers a co-signer release so that the co-borrower can potentially opt out of the loan.

The price you will receive

The rate you receive varies depending on whether you get a fixed or variable loan. Rates are partly based on your creditworthiness – those with higher credit scores often get the lowest rates. But your rate is also based on other factors. Credit history, income, and even the degree you’re working on and your career can all play a role.