There are two main types of student loans: federal student loans — issued by the U.S. Department of Education — and private student loans. Both differ in interest rates, eligibility requirements, loan modification options and forgiveness programs.
Although federal loans offer more flexible repayment terms, a private student loan can help cover your school’s total cost of attendance if you’ve exhausted all other options.
Take advantage of our best student loan guide and find the best lenders to help meet your higher education goals.
Our Top Picks For Best Student Loans
Best Federal Student Loans:
Best Private Student Loans:
- College Ave – Best Overall
- Sallie Mae – Best for Graduate Students and Non-degree Granting Schools
- Citizens Bank – Best for Parents
- SoFi – Best for No Fees and Discounts
- Ascent – Best for Borrowers Without a Cosigner
- LendKey – Best Marketplace
Federal Student Loans
Federal student loans are backed by the U.S. Department of Education and offer exclusive benefits and repayment options that are not available with private student loans.
There are four main types of federal student loan programs available to undergraduate and graduate students as well as parents seeking financial aid to fund their children’s education.
- Direct Subsidized Loan: For those undergraduate students in financial need. The U.S. Department of Education pays the interest while the student is in school at least half-time, during the grace period after leaving school, and during deferment.
- Direct Unsubsidized Loan: For undergraduate, graduate, and professional students regardless of financial need. Students are responsible for paying interest at all periods.
- Direct PLUS Loans: For graduate and professional students as well as parents. This loan requires a credit check, and borrowers with adverse credit history must meet additional requirements.
- Direct Consolidation Loans: For borrowers who want to combine multiple federal education loans into one loan.
Benefits of federal student loans
- Lower interest rates
- Subsidized interest payments
- 6-month grace period after graduation
- Income-driven repayment plans.
- Possibility of loan forgiveness
Best Private Student Loans Reviews
Why we chose it: College Ave ranks as best overall due to its wide array of loan and repayment options, fewer fees and no prepayment penalties. This lender also considers forbearance plans for borrowers in financial hardship.
- Undergraduate interest rates start at 1.79%
- Choice of 5-15 year repayment terms
- Prequalification with a soft credit pull
- Students with career loans receive $150 when completing their degree
- $25 late payment fee
- U.S. students must make over half of the scheduled payments on time before they can apply for the cosigner release
- Undergrad rates — Variable: 2.49%–13.85% with autopay discount
- Undergrad rates — Fixed: 3.22%–13.95% with autopay discount
- Graduate rates — Variable: 2.49%–10.97% with autopay discount
- Graduate rates — Fixed: 3.99%–11.98% with autopay discount
College Ave Student Loans offers private loans for students, international students and parents. Borrowers are not required to be enrolled full or half time to be eligible, but must be registered in a qualifying institution and show satisfactory academic progress.
College Ave finances the total cost of attendance and disburses the loan directly to the institution. In addition, parents can receive up to $2,500 to help students manage additional expenses such as books and transportation.
College Ave partnered with Payce Rewards, a free service where students earn cash back for online and in-store purchases to help them pay down their student loans. Payce Rewards is linked to around 61,000 stores and restaurants across the United States, including CVS, Walmart and DoorDash.
College Ave offers loans for undergraduate, graduate, MBA, medical school, graduate health professions, dental school, law school, careers, parents and student loan refinance.
To apply for a private student loan with College Ave, student borrowers must:
- Be at least 16 years of age
- Be enrolled in an eligible school in the USA
- Have a social security number
- Meet the school’s satisfactory academic progress guidelines
Students interested in applying for a private student loan with College Ave can obtain pre-approval with a soft credit check that won’t impact their credit score.
Repayment Options and Fees
While in school, College Ave offers borrowers several repayment options, including interest-only, full principal and interest and flat $25 monthly payments. With flexible loan terms, you can pay back your loan in 5-, 8-,10-, or 15- year terms.
For those in financial hardship, College Ave offers up to 12 months of forbearance for the life of the loan, usually in 3- or 6- month increments depending on the situation.
This online lender does not charge any late fees, application, origination fees or prepayment penalties.
Why we chose it: With Sallie Mae, graduate student borrowers can make interest-only payments for a year after graduation or up to 48 months of deferment if they’re participating in an internship, clerkship, fellowship or residency program.
- Available for students in less than half-time enrollment
- Four months of Chegg tutoring service for undergraduate and career training loans
- Free access to your FICO score, updated quarterly
- 100% US based customer service
- No information available about credit score requirements
- Charges late payment fee
- No pre-approval
- Undergrad rates — Variable: 3.37%–13.72% with autopay discount
- Undergrad rates — Fixed: 3.75%–13.72% with autopay discount
- Graduate rates — Variable: 3.12%–12.80% with autopay discount
- Graduate rates — Fixed: 4.25%–12.92% with autopay discount
Sallie Mae Loans are available for graduate, undergraduate and career training students attending non-degree-granting schools. Sallie Mae also provides graduate students with 100% coverage for all school-certified expenses with no maximum amount.
The Smart Option Student Loan for Career Training covers a full year of training or trade school costs, including equipment, supplies and tools. The online application can be completed in around 10 minutes, and it takes ten business days or less for the loan to be disbursed to your school. Variable interest rates for the Smart Option Student loan start at 2.62% and fixed interest rates start at 3.75%, both with the autopay discount.
Sallie Mae offers loans for undergraduate, career training, graduate, MBA, medical school residency, dental school residency, health professions, law school and bar study.
To apply for a private student loan with Sallie Mae, student borrowers must:
- Show evidence of academic enrollment status, degree and course of study
- Be a US citizen, permanent resident or international student with cosigner
- Include references from two personal contacts other than the cosigner
- Provide financial information, including bank statements, mortgage or rent payments
- Provide income and employment information (cosigner or student)
Repayment options and fees
Borrowers can choose from interest-only, fixed-monthly repayment options or defer payments while in school.
After graduation, Sallie Mae’s Graduate Repayment Period allows graduate students to make interest-only payments for a year after the six-month grace period ends. The deferred repayment plan allows recent graduates participating in an internship, residency, or fellowship to keep their in-college repayment option.
Students can also get a 0.25% interest rate discount for enrolling in autopay. Sallie Mae charges a late payment fee of 5% of the amount of the past due payment (up to $25).
Why we chose it: Citizens Bank is our best student loan lender for parents because it offers competitive rates for parent loans and a variety of discounts.
- Apply with or without a cosigner
- No origination fee, service fees or prepayment penalties
- No separate application for Multi-Year Approval
- Student loan calculator
- Can apply for a cosigner release after 34 on-time consecutive payments of full principal and interest
- No prequalification
- Undergrad rates — Variable: 2.29%–9.05%
- Undergrad rates — Fixed: 3.99%–9.93%
- Graduate rates — Variable: 2.89%–9.01%
- Graduate rates — Fixed: 4.93%–9.91%
Citizens Bank offers student, parent and refinance loans. With Citizens, parents can apply for loans with interest rates starting at 2.36% for a variable APR and 3.71% for a fixed APR. Citizens also offers existing customers a 0.25% Loyalty Discount that can be combined with the autopay reduction rate of 0.25%. New customers who sign up for autopay can also obtain a 0.25% interest rate discount.
Citizens Bank doesn’t offer prequalification to its potential customers. Still, with its student loan calculator, student borrowers and parents can obtain an estimate of their monthly loan payments before submitting an online application.
Students and parents can opt for Multi-Year Approval with the initial loan application and receive funding for the entire college career. Funds must be requested every new school year, but requests don’t require additional documentation or a hard credit check inquiry for approval.
Citizens Bank offers undergraduate, MA, MFA, MBA, law, medical, dental, bar study, medical residency and parent loans.
To apply for a loan with Citizens Bank, students must:
- Be a US citizen, permanent resident, or international student with a cosigner
- Be enrolled at least half-time in a degree-granting program
- Have good credit or a cosigner
- Have no previous student loan default
Repayment options and fees
Citizens Bank offers a variety of in-school repayment options including interest only and full principal and interest. Borrowers can also select a 6 months loan deferment. Repayment terms go from 5- to 20 year-term.
This lender doesn’t charge any origination, disbursement or prepayment fees. Citizens Bank late payment fee is 5% of the total payment amount.
Why we chose it: Credible allows borrowers and cosigners to compare multiple lenders with only one application and a soft credit check that won’t impact your credit score.
- Prequalification with a soft credit check
- No origination fee or prepayment penalties
- Guarantees lowest interest rate
- APR rates, loan terms and repayment options depend on the lender
- Not all Credible partners offer cosigner release
- Undergrad rates — Variable: 2.49%-13.85%
- Undergrad rates — Fixed: 3.22%-14.75%
- Graduate rates: Vary by lender
Credible is a free online marketplace that partners with private student loan lenders like Ascent, Citizens Bank, Discover, College Ave, EdvestinU, InvestED, MEFA and Sallie Mae. Students and cosigners can apply for prequalification with a soft credit check and compare offers from different lenders at once.
The Better Rate guarantees potential borrowers the lowest rates or Credible will pay a $200 gift card. With most lenders, you can borrow up to the total cost of attendance, and the repayment plans range from five to 20 years. Since Credible is a marketplace, loan terms, minimum loan amount and credit score varies by lender.
Credible offers undergraduate, graduate, parent, medical school, law school and MBA loans.
To apply for a student loan with Credible, potential borrowers must:
- Be a US citizen or permanent resident
- Be enrolled at least part-time in a qualifying institution
- Provide income and employment information
Other eligibility requirements and documentation vary by lender.
Repayment options and fees
Credible partners offer a variety of in-school repayment options including full principal and interest, interest-only, and partial interest. Some lenders also offer forbearance for those borrowers who want to start repayment after graduation.
This marketplace doesn’t charge any origination fees or prepayment penalties.
Why we chose it: SoFi is our choice for the best student loan lender for no fees and discounts because of its variety of rate discounts, membership benefits and no late fees.
- SoFi app reward points can be used to pay eligible student loans
- Students enrolled in an eligible internship or residency program can request deferment for up to 54 months
- No proof of satisfactory academic progress required
- Not available for students pursuing an associate's degree
- Interest will accrue during the forbearance period
- Minimum loan amount of $5,000
- Undergrad rates — Variable: 2.59%–12.13% APR with autopay discount
- Undergrad rates — Fixed: 3.50%–13.35% APR with autopay discount
- Graduate rates — Variable: 2.99%–12.13% APR with autopay discount
- Graduate rates — Fixed: 4.50%–13.35% APR with autopay discount
SoFi offers no-fee private student loans and a variety of discounts to support students and parents looking to finance a higher education degree. Also, borrowers don’t have to worry about late fees if they miss a monthly payment.
Private student loan discounts include:
- Autopay: 0.25% interest rate reduction after enrolling in autopay
- SoFi Member Rate: 0.125% interest reduction rate for SoFi members( borrower or cosigner)
- Return Borrower Rate: 0.125% interest reduction rate when the borrower or cosigner takes a second loan with SoFi
- Family Discount: 0.25% interest rate reduction for cosigners with more than one undergraduate loan account
Other membership benefits include personalized career advice, the Member Rewards Program and the Unemployment Protection Program.
For the rewards program, SoFi members must download and use the app to manage banking accounts, credit cards, loan payments and investments. For every app transaction, users earn redeemable points that can be applied toward student loan payments. (Some of these benefits are not available to residents of Ohio.)
The Unemployment Protection Program grants a forbearance period for up to 12 months to members who have the loan in good standing and provide evidence of losing their job through no fault of their own.
SoFi offers undergraduate, graduate, MBA, law school, health professions and parent loans.
To apply for a private student loan with SoFi, student borrowers must:
- Be US citizen, permanent resident or have a Social Security number
- Be employed or have a cosigner
- Be enrolled at least half time in a four-year degree-granting program
- Have reached the age of majority in their state of residence
- Use the loan for higher education expenses at eligible institution
Repayment options and fees
SoFi offers flexible repayment options for all student loan borrowers while in school, including options for full principal and interest payments, interest-only payments or a $25 flat monthly payment. Borrowers can also choose a deferment option to start paying for their loan six months after graduation.
With SoFi, there are no application, origination fees or prepayment penalties.
Why we chose it: We chose Ascent as the best for borrowers without a cosigner due to its specialized non-cosigned loan for undergraduate, graduate, DACA and international students.
- 1% autopay discount for Non-Cosigned Outcomes-Based loans
- Start payments up to nine months after graduation
- 1% Cash Back Graduation Reward
- DACA students can apply without a cosigner
- International students can't apply for cosigner release
- Cosigned loans have a minimum credit score requirement for students and cosigners
- Undergrad rates — Variable: 2.52% - 11.11%
- Undergrad rates — Fixed: 3.22% - 13.09%
- Graduate rates —Variable: 1.76% - 12.30%
- Graduate rates — Fixed: 3.27% - 14.75%
Ascent is one of the few private lenders offering no-cosigned loans to undergraduate, graduate, and DACA (Deferred Action for Childhood Arrivals) students. DACA protects eligible immigrant youth who came to the United States as children from deportation and helps them apply for a Social Security number, a driver’s license and a work permit.
The Non-Cosigned Outcomes-Based loan is available for full-time junior and senior students with or without two years of established credit history. For students without an established credit history, Ascent bases eligibility on the school, program, major, academic performance (GPA), graduation date and cost of attendance.
Ascent offers cosigned loans for undergraduate, graduate, DACA, and international students. Cosigned loans include perks like a 1% cash back graduation reward and a 0.25% deduction rate with autopay. Students can apply for a cosigner release after making 12 consecutive on-time payments.
With Ascent, there are no origination, application, disbursement or prepayment penalties tied to undergraduate or graduate private student loans.
Ascent offers cosigned credit-based, non-cosigned credit-based, non-cosigned-outcomes-based (juniors and seniors), MBA, dental, medical and PhD private student loans.
To apply for a student loan with Ascent, borrowers must:
- Be a US citizen, DACA, or US temporary resident
- Be a full- or half-time student at an eligible institution
- Have at least a 2.9 GPA
- Meet a minimum gross annual income of $24,000 for the current and previous year and submit satisfactory proof-of-income (cosigners)
Repayment options and fees
Ascent’s repayment options for in-school borrowers:
- $25 monthly payment
- Forbearance and deferment options from 1 to 36 months
Ascent offers a wide range of repayment terms (5-, 7-, 10-, 12-, 15, 20- year terms). Borrowers can start full principal and interest payments nine months after graduation.
Why we chose it: We chose LendKey as the best marketplace because, besides partnering with a large network of loan providers, the company also services student loans.
- Partners with credit unions and community banks
- Services loans and offers in-house customer service
- Offers a cosigner release option after 12 to 48 on-time payments
- $200 referral bonus with Refer and Earn program
- Cosigner release depends on lender approval
- Only one term (10-year) repayment option
- Interest accrues during forbearance period
- Undergrad rates — Variable: 3.09%–8.69% with autopay
- Undergrad rates — Fixed: 3.99%–9.74% with autopay
- Graduate Rates: Vary by lender
LendKey is not a lender but a digital loan marketplace that partners with over 13,000 small banks and credit unions. Unlike other marketplaces, LendKey services loans and offers in-house customer service, meaning it will not underwrite or disburse your loan but will manage all administrative and customer-related aspects of it.
Private student loans obtained through LendKey begin at $2,000 and can finance certified education-related expenses, including room and board, tuition, fees, transportation, laptop and textbooks.
Applications are credit-based, and cosigners are allowed if the borrower doesn’t meet eligibility criteria. Cosigner release will depend on the lender’s approval and requirements.
Lendkey offers undergraduate, graduate, and student refinance loans.
To apply for a loan through LendKey, students must:
- Be a US citizen or permanent resident
- Be enrolled at least half-time in an eligible school
- Be the majority of age
- Have a credit score or cosigner
Repayment options and fees
Repayment options for LendKey’s student loans include fixed or interest-only repayments while in school, and up to six months of forbearance.
As a marketplace, LendKey offers private student loans and student loan refinancing with no application or origination fees. Late payment or insufficient funds fees depend on the lender.
Student Loans Guide
Because comparing student loans can be stressful for both students and their families, we’ve outlined what you need to know to navigate the process.
Table of contents:
- How do student loans work?
- Types of student loans
- Student loan terms
- Federal student loans vs private student loans
- How to apply for student loans
- How to pay off your student loans
- Latest student loans news
How do student loans work?
Student loans are issued by the federal government or private lenders to help pay for undergraduate or graduate studies. The loan goes towards tuition, books, student housing and other education-related expenses.
Once a student loan application is approved, the funds are sent directly to the school to cover tuition, fees and on-campus student housing. The remaining balance is disbursed to the student.
Private loans accrue interest from the start of the loan, while federal loans have more flexible terms. Depending on the loan type, repayment may begin after you graduate and find employment or while you’re still in school.
Types of student loans
Since private loans don’t offer the same protections that federal loans do, the general advice is to seek private student loans after you’ve exhausted every federal option.
Federal student loans
Federal student loans are the first choice for many due to their low rates, flexible repayment options and federal protections.
The U.S. Department of Education offers the following loan options:
- Need-based: Direct Subsidized Loan
- Non-need-based: Direct Unsubsidized Loan and Direct Plus Loan
To apply for federal loans and additional financial aid, students must submit the Free Application for Federal Student Aid (FAFSA) once every school year. Your school will calculate how much you’re eligible to borrow based on the cost of attendance and your family’s financial information.
The federal government limits how much a student can borrow annually and over their entire college career based on the academic year, loan type, if the borrower is an undergraduate or graduate student, or if the borrower is an independent or dependent student.
Pros and Cons of federal student loans
|Terms and conditions are set by law||Only available to U.S. citizens|
|Income-driven loan repayment plan options||Subsidized loans are need-based|
|Opportunities for student loan forgiveness||Subsidized interest only applies to undergraduate students|
|No credit check||No statute of limitations on loan collections|
|Fixed rates, low-interest rates and flexible repayment options|
|Free application process|
Private student loans
Private student loans are similar to personal loans, as they are issued by private banks or credit unions.
Private student loan lenders look at students' credit scores and credit reports to determine interest rates and loan approval. Since most students don't have enough credit history, lenders often require a qualifying cosigner.
Private loans don’t feature the same benefits as federal student loans, but they can help pay your school’s total cost of attendance if you’re no longer eligible for federal aid. Most schools will have a list of recommended lenders they partner with.
You will receive the remaining loan amount directly from the school after tuition, fees, and student housing are covered.
Most private lenders start loan repayment while you’re still in school, but some do extend deferment or grace periods, although interest will continue to accrue.
Pros and cons of private student loans
|Available to U.S. citizens and qualifying international students||Each bank sets its own terms and conditions|
|No financial need requirements||Limited repayment options and hardship assistance programs|
|Fixed and variable rates||No student loan forgiveness opportunities|
|Higher loan limits||Requires credit check|
|Origination, application, and early payment fees may apply|
|No student loan forgiveness opportunities|
|The government and your school limit the loan amount|
Student loan terms
Federal student loan terms are set by law, while the lender determines private student loan repayment plans. When shopping for private student loans, borrowers should compare repayment options to see which lender allows more flexibility.
Federal student loan terms
For federal student loans, the government offers multiple repayment plans that can be grouped as follows:
|Repayment plan||Monthly payment||Repayment period||How it works||Eligible loans|
|Standard repayment plan||Fixed monthly payments of at least $50||Up to 10 years (between 10 and 30 for consolidation loans)||Payments are spread out in equal installments over the loan term||• Direct Subsidized/Unsubsidized |
• Direct PLUS
• Direct Consolidation
• Subsidized/Unsubsidized Stafford
• FFEL PLUS/FFEL Consolidation
|Graduated repayment plan||Payments increase every two years||Up to 10 years (between 10 and 30 for consolidation loans)||Monthly payments gradually increase over time||Same as standard repayment|
|Extended repayment plan||A fixed or graduated amount||Up to 25 years||Allows you to make a lower payment for a longer period||Same as standard repayment|
|Income-based repayment||As low as 10% of your discretionary income||20 to 25 years, depending on the type of repayment plan||Allows you to make monthly payments based on your income||Depends on the type of repayment plan|
Private student loan terms
Generally, private lenders will allow you to:
- Defer loan and interest payments until after you graduate
- Make fixed monthly payments towards interest and principal
- Pay a moderate monthly payment towards accrued interest only
Lenders also may offer grace periods and forbearance to students who cannot make their monthly payments. However, interest will continue to accrue, increasing their student debt.
How to apply for student loans
The following are general tips to consider before applying for student loans, whether federal or private.
1. Calculate your financial needs
Consider your school’s cost of attendance (tuition, materials, food, room and board, etc.) and then factor in extracurricular living expenses. Money’s Best Colleges in America 2022 contains information about admission, costs, financial aid and graduation rate of hundreds of public and private institutions around the United States.
If you’re considering private loans, take the time to evaluate your creditworthiness and whether you will need a cosigner.
Private lenders base interest rates on your credit score, income and employment history. Having bad credit can keep you from getting the best rates or even from getting approved at all. If you have a cosigner, lenders will consider their credit for approval as well.
2. Look into federal loans
We recommend you consider federal loans first, as they have several advantages over private loans and there is a variety of options to choose from.
If you need to take out a private student loan, keep in mind that each lender offers different terms, rates and benefits.
Shop around and compare fees and APRs from multiple lenders before making a decision.
3. Seek expert help
Read expert advice from sources like the Consumer Financial Protection Bureau and CollegeBoard before you apply for private student loans. There may be other options available to you, such as grants and scholarships.
If you are a graduate school student or parent looking into private student loans, it could also be worth paying a financial planner to help you weigh the costs and benefits. Search for a fee-only planner who has experience helping clients plan for college or pay down student debt.
4. Choose the right lender for you
To choose the best student loan, you should have a clear understanding of what each lender requires and what they offer regarding interest rates and repayment options:
- Check your lender’s credentials: Only do business with reputable lenders. To determine this, use reputable sources like Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).
- Apply for prequalification: By prequalifying, you get to see what rates, terms and benefits each lender offers, while avoiding hard credit inquiry. Be sure to understand how different interest rates and terms affect your payments.
- Look for lenders with in-school repayment options: Starting loan repayment early will reduce the debt burden. Opt for private lenders with multiple options, a grace period, and no penalties for early loan repayment.
- Opt for lenders with low or no fees: Application and origination fees are processing costs added to your principal, which means you’ll pay interest on them. If you can, look for lenders that don’t charge late fees or prepayment penalties either.
- Take advantage of discounts and perks: Many lenders offer autopay discounts and other perks like free study or tutoring programs, and bonuses for good grades or referring friends.
Check what documents you need to apply
To apply for federal student loans you will need:
- Social Security Number or Alien Registration Number
- Income (W2 or tax returns)
- If applicable, bank statements, investment records, or evidence of untaxed income
- Complete and submit the Free Application for Federal Student Aid (FAFSA) before the deadline
To apply for private student loans you will need:
- Social Security Number and other personal information
- Determine if you need a cosigner
- Gather tax returns, and income and employment information
- Gather rent or mortgage documents
- File for preapproval and compare rates
- File formal application no later than a month before tuition is due
How to pay off your student loan
Paying off student loans isn't easy. National student loan debt stands at $1.6 trillion, an overwhelming debt burden that millions of students will most likely never repay in their lifetime.
Ill-informed recommendations for paying off student loans include credit card balance transfers or filing for bankruptcy, but these can worsen your financial situation.
Many consider student loan forgiveness as the only viable option for student debt relief, but that is still an ongoing debate with no guarantees.
With this in mind, we have outlined some of the best practices to help you stay on top of your student loan debt:
Start repayment while you’re still in school
Private student loans begin accruing interest while you’re still in school. To keep interests down, begin repayment as early as possible. You can save thousands of dollars over the life of the loan by keeping up with interest payments while you finish your degree.
Take advantage of loan forgiveness programs
President Biden announced a student loan forgiveness program for federal student loan borrowers. The program establishes that student loan borrowers earning less than $125,000 will receive $10,000 in debt cancellation, while borrowers who received Pell Grants during college will be eligible for $20,000 in forgiveness. The income cutoff will be based on annual income during the pandemic.
The announcement didn’t include many details about the program including how student borrowers can apply or when they will see the loan relief reflected on their accounts. President Biden also informed that student loan repayments will restart on January 1st, 2023.
Federal loans are currently eligible for loan forgiveness in certain circumstances, like teaching full time for a number of years, working with AmeriCorps or working full time for a non-profit or the government.
Keep in mind that you will need to make payments under an eligible repayment plan before you can apply.
Create a budget
Budgets help track your spending habits and organize your finances. You may identify areas where you can cut back on spending to be able to make more payments towards your student loan debt.
Consider refinancing and debt consolidation
Debt consolidation and student loan refinancing can lower interest rates and monthly payments if you apply with a good credit score. You can also refinance for a shorter loan term to reduce the overall paid interest.
Pay more than the minimum towards your principal
Calculate the maximum you can afford to pay each month toward your principal loan amount. If you make interest-only payments, interest will continue to accrue, and you won’t see a significant decrease in your loan balance.
Consider the debt snowball or debt avalanche methods
Two of the most popular strategies to minimize debt are the snowball and avalanche methods.
|Debt snowball||Debt avalanche|
|Pay more towards your smallest debt and make minimum payments towards the rest. This can keep you motivated by helping you get rid of smaller debts quickly.||Tackle debt with the highest interest rate first until completely paid off. This can help you save on interest payments and keep your debt from ballooning further.|
Latest Student Loans News
- Biden announced on August 24th, 2022 that federal student loan borrowers could receive up to $20,000 in debt cancellation. Read on to find out who qualifies for student loan forgiveness under Biden’s plan.
- If you got an email from Nelnet about the end of Biden’s student loan payment pause, it was a mistake. Nelnet mistakenly emailed borrowers communicating the restart of student loan payments and autopay deductions.
- Student loan refinancing isn’t always a smart idea for every borrower, but under the right circumstances, it could mean thousands of dollars in savings over the life of the loan. If you're thinking about refinancing, check our recommendations on how to refinance student loans.
- In addition to the U.S. Department of Education's temporary suspensions of student loan monthly payments and 0% interest rates, it will also apply a fresh start on repayments. This means that the impact of any delinquency and defaults will be effectively eliminated, allowing borrowers to begin repayments in good standing.
- Student loan repayments restart on January 1st, 2023. If you plan on tackling your student loan debt for good, check out our tips on how to pay off student loans fast.
- Interest rates on federal student loans are set to rise more than a percentage point starting in July of 2022. This increase will apply to loans issued for the 2022-2023 academic year.
- Even though the student loans repayment moratorium has been extended, it might be a good idea to enroll in auto payments before payments resume.
Student Loan FAQ
When do student loan payments resume?
The U.S. Department of Education extended the moratorium on federal student loan payments and interest through January 1st, 2023. The final extension was announced in August 2022.
Unfortunately, this rule is not applicable to private student loans.
How do student loans work?
Student loans are a financing option available to students and parents who are unable to cover education expenses out of pocket. There are two main types of student loans: federal and private.
Federal student loans are issued by the U.S. Department of Education. They tend to feature competitive rates and better repayment terms and protections. These are still loans, however, and they must be paid back with interest.
Private student loans are issued by private lenders. These types of loan don't offer the same protections as federal student loans, but they are an alternative for those who have taken the maximum federal student loan amount and still need help to fund their education.
Once you take out a student loan, interest will begin to accrue. For this reason, it's a good idea to start making payments toward your loans while you're still in school. Moreover, while you don't have to pay back your federal student loans while in school, some private lenders may require it.
How to apply for student loans
To apply for federal student loans, you first need to complete the free application for federal student aid (FAFSA). Your financial aid officer at your school or university will provide you with information about what student loans you qualify for and other forms of financial aid.
What happens to student loans when you die?
If you have federal student loans, your loans will be discharged tax-free upon your death. The same rule applies to federal Parent PLUS loans.
Private loans, on the other hand, work differently. For instance, if your private loan originated before 2018, your lender may hold a cosigner or your estate responsible for any outstanding student loans.
Private student loan borrowers who originated loans after 2018 won't run into the same problem, however. In 2018, Congress updated the Truth in Lending Act (TILA), which requires creditors and lenders to release co-signers and your estate from financial obligations related to student debt.
What happens if you don't pay student loans?
If you cannot make your student loan payments on time, call your lender to see what your options are. Many private lenders offer protection programs like SoFi, whose Unemployment Protection Program allows your loans to be in forbearance for up to 12 months.
If you cannot make your payments and default on your loan, your credit score and history will be affected. Check our section on how to pay off your student loans for more information about payment options and other changes related to the coronavirus pandemic.
What is a private student loan?
How We Chose The Best Student Loans
To choose the best student loans of the year, we looked at both federal and private student loan options, outlining the benefits and drawbacks of each.
Our reviews, however, are focused on private student loan lenders. Private student loans don't offer the same benefits and protections you would have through federal student loans.
For this reason, we prioritized private lenders that offered the following:
Flexible repayment options
Federal student loans have several different standardized payment plan models, whereas private lenders often offer less flexibility. We looked for lenders that offered deferred payment options, forbearance plans, and interest-only loans while still in school.
Low or no processing fees
Possible costs for private loans can include origination, application, and disbursement fees or prepayment penalties. When we looked at the industry, we looked for lenders that waived these or offered reduced fees and had discounts available.
Competitive interest rates
For undergraduate degree loans, we preferred lenders with an annual percentage rate between 2.99% and 12%, and for graduate student loans, from 3.20% to 12%.
Students and parents should compare offers from multiple lenders to ensure they’re getting the lowest rates. With this in mind, we also included student loan marketplaces that allow borrowers to compare loan offers from multiple lenders in one place.