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By Norma RodríguezAndrea Agostini and Gabriella Cruz-Martínez
Updated: November 18, 2021 12:26 PM ET | Originally published: September 1, 2021
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Best Overall
Best for Graduate Students and Non-degree Granting SchoolsBest for ParentsBest for No Fees and DiscountsBest for Borrowers Without a CosignerBest Marketplace
College AveSallie MaeCredibleSoFiAscentLendKey
Our PartnerOur PartnerOur PartnerOur PartnerOur PartnerOur Partner
Loan Types

Undergrad, Graduate, Parent PLUS

Undergrad, Graduate

Undergrad,Graduate, Parent PLUS

Undergrad, Graduate

Undergrad, Graduate

Private student loan, student loan refinancing (marketplace)

Undergraduate Rates

Fixed: 2.99%–12.99%

Variable: 0.99%– 11.98%

Fixed: 3.50%– 12.60%

Variable: 1.13%–11.23%

Fixed: 2.99%–12.99%

Variable: 0.99%–11.98%

Fixed: 3.49% –10.66%

Variable: 11.11%–11.22%

Fixed: 2.97%–12.95%

Variable: 1.50%–11.33%

Fixed: 3.99%–8.49%

Variable: 1.49%– 7.66%

Graduate Rates

Fixed: 4.49%– 11.98%

Variable: 1.99% – 10.97%

Fixed: 4.75%– 12.11%

Variable: 2.12%– 11.64%

Varies by lender

Fixed: 3.29%–12.94

Variable: 1.09% – 11.33%

Fixed: 2.91%–12.95%

Variable: 1.48%–11.08%

Varies by lender

Discounts

0.25% APR discount with AutoPay

0.25% APR discount with AutoPay

Varies by lender

0.25% APR discount with AutoPay

0.25% or 2%, depending on the loan

0.25% APR discount with AutoPay

Fees

No application or origination fees. No prepayment penalties. Does charge late fees.

No application or disbursement fees. Does charge late fees and returned check fees.

Varies by lender

No application or origination fees. No prepayment penalties.

Graduate loans only: 1% cashback and discount for automatic debits.

No application fees.

Best Overall
College Ave
Our Partner
Check Price
Loan Types

Undergrad, Graduate, Parent PLUS

Undergraduate Rates

Fixed: 2.99%–12.99%

Variable: 0.99%– 11.98%

Graduate Rates

Fixed: 4.49%– 11.98%

Variable: 1.99% – 10.97%

Discounts

0.25% APR discount with AutoPay

Fees

No application or origination fees. No prepayment penalties. Does charge late fees.

Best for Graduate Students and Non-degree Granting Schools
Sallie Mae
Our Partner
Check Price
Loan Types

Undergrad, Graduate

Undergraduate Rates

Fixed: 3.50%– 12.60%

Variable: 1.13%–11.23%

Graduate Rates

Fixed: 4.75%– 12.11%

Variable: 2.12%– 11.64%

Discounts

0.25% APR discount with AutoPay

Fees

No application or disbursement fees. Does charge late fees and returned check fees.

Best for Parents
Credible
Our Partner
Check Price
Loan Types

Undergrad,Graduate, Parent PLUS

Undergraduate Rates

Fixed: 2.99%–12.99%

Variable: 0.99%–11.98%

Graduate Rates

Varies by lender

Discounts

Varies by lender

Fees

Varies by lender

Best for No Fees and Discounts
SoFi
Our Partner
Check Price
Loan Types

Undergrad, Graduate

Undergraduate Rates

Fixed: 3.49% –10.66%

Variable: 11.11%–11.22%

Graduate Rates

Fixed: 3.29%–12.94

Variable: 1.09% – 11.33%

Discounts

0.25% APR discount with AutoPay

Fees

No application or origination fees. No prepayment penalties.

Best for Borrowers Without a Cosigner
Ascent
Our Partner
Check Price
Loan Types

Undergrad, Graduate

Undergraduate Rates

Fixed: 2.97%–12.95%

Variable: 1.50%–11.33%

Graduate Rates

Fixed: 2.91%–12.95%

Variable: 1.48%–11.08%

Discounts

0.25% or 2%, depending on the loan

Fees

Graduate loans only: 1% cashback and discount for automatic debits.

Best Marketplace
LendKey
Our Partner
Check Price
Loan Types

Private student loan, student loan refinancing (marketplace)

Undergraduate Rates

Fixed: 3.99%–8.49%

Variable: 1.49%– 7.66%

Graduate Rates

Varies by lender

Discounts

0.25% APR discount with AutoPay

Fees

No application fees.

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.

Federal loans offer more flexible repayment terms, but private student loans can help you 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.

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See Today's Rates

Our Top Picks For Best Student Loans

Best Federal Student Loans:

  • Direct Subsidized Loan
  • Direct Unsubsidized Loan
  • Direct PLUS Loans for Parents & Graduates

Best Private Student Loans:

  • College Ave – Best Overall
  • Sallie Mae – Best for Graduate Students and Non-degree Granting Schools
  • Credible – Best for Parents
  • SoFi – Best for No Fees and Discounts
  • Ascent – Best for Borrowers Without a Cosigner
  • LendKey – Best Marketplace

Federal Student Loans - Pros and Cons

Federal student loans are backed by the U.S. Department of Education and offer exclusive benefits and repayment options that are not available for 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

  • Only available to undergraduate students with financial need
  • Loan amounts depend on the school's cost of attendance and can't exceed financial need
  • U.S. Department of Education pays interest on the loan while you're in school at least half-time, during the grace period after you leave school and during deferment

Direct Unsubsidized Loan

  • Available to undergraduate, graduate and professional students
  • Don't require students to demonstrate financial need
  • Loan amount depends on the school's cost of attendance and other financial aid received
  • Students are responsible for paying interest at all periods

Direct PLUS Loans

  • Available to graduate and professional students as well as parents
  • Requires credit check and those with adverse credit history must meet additional requirements
  • Loan amount depends on the school's cost of attendance minus other financial aid received

Direct Consolidation Loans

  • Allow borrowers to combine all eligible federal student loans into one loan under one servicer
  • Interest rate is fixed and based on the average of the interest rates being consolidated
  • Monthly payments may be lower but bowers may end up paying more interest over the life of the loan

Best Private Student Loans Reviews

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Undergrad rates — Variable
0.99%–11.98% with autopay discount
Undergrad rates — Fixed
2.99%–12.99% with autopay discount
Graduate rates — Variable
1.99%–10.97%
Graduate rates — Fixed
4.49%–11.98%
Undergrad rates — Variable
0.99%–11.98% with autopay discount
Undergrad rates — Fixed
2.99%–12.99% with autopay discount
Graduate rates — Variable
1.99%–10.97%
Graduate rates — Fixed
4.49%–11.98%
Undergrad rates — Variable
0.99%–11.98% with autopay discount
Undergrad rates — Fixed
2.99%–12.99% with autopay discount
Graduate rates — Variable
1.99%–10.97%
Graduate rates — Fixed
4.49%–11.98%
Pros
  • Approval decisions in as little as three minutes
  • More repayment options than other student loan lenders
  • Free prequalification without a hard credit pull
  • Allows cosigner release
Cons
  • International students can only apply with a qualified cosigner
  • U.S. students must make over half of the scheduled payments on time before they can apply for the cosigner release

College Ave Student Loans offers student borrowers and parents fixed and variable interest rate loans as well as student loan refinancing options.

You don't need to be enrolled half-time in a degree-granting institution to be eligible for a College Ave private student loan. However, this lender does require all applicants to have a valid U.S. social security number, including international students, who are also required to apply with a qualified cosigner.

If enrolled in a qualifying institution, students can apply for $1,000 or up to the school’s total cost of attendance.

Undergraduate students who need to borrow more money may apply for College Ave’s Multi-Year Peace of Mind loan program. However, all additional loans must be submitted with a cosigner to be approved.

Repayment Options and Fees

While in school, College Ave offers borrowers multiple repayment options including interest-only payments, full principal and interest payments and flat $25 monthly payments.

The online lender does not charge late fees, application or origination fees. They also don’t penalize borrowers for paying off their loans early. Borrowers have the option to enroll in automatic payments and get a discount of up to 0.25%.

Loans offered by College Ave

  • Undergraduate
  • Career
  • MBA
  • Medical school
  • Dental school
  • Law school
  • Parent PLUS
  • Student loan refinance
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Undergrad rates — Variable
1.13%–11.23% with autopay discount
Undergrad rates — Fixed
3.50%–12.60% with autopay discount
Graduate rates — Variable
2.12%–11.64% with autopay discount
Graduate rates — Fixed
4.75%–12.11% with autopay discount
Undergrad rates — Variable
1.13%–11.23% with autopay discount
Undergrad rates — Fixed
3.50%–12.60% with autopay discount
Graduate rates — Variable
2.12%–11.64% with autopay discount
Graduate rates — Fixed
4.75%–12.11% with autopay discount
Undergrad rates — Variable
1.13%–11.23% with autopay discount
Undergrad rates — Fixed
3.50%–12.60% with autopay discount
Graduate rates — Variable
2.12%–11.64% with autopay discount
Graduate rates — Fixed
4.75%–12.11% with autopay discount
Pros
  • Fixed APR rates starting at 4.25% for undergraduate students
  • Four months of Chegg tutoring service for undergraduate loans
  • Free access to your FICO score, updated quarterly
  • No origination fees
  • Cosigner release option
Cons
  • No information available about credit score requirements
  • Charges late payment fee

Sallie Mae Loans are available for parent borrowers and graduate, undergraduate and vocational students attending non-degree-granting schools. Sallie Mae is also one of the few lenders with student loan options for part-time students.

If you attend a non-degree granting school, Sallie Mae’s Career Training student loan offers competitive fixed- and variable-rate loans with no origination fee or prepayment penalties. Fixed-rate loans range from 6.62% to 13.83% APR, while variable-rate loans start at 4.12% and go up to 11.52%.

Additionally, Sallie Mae offers a "multi-year advantage" for returning students, which allows recipients to continue borrowing year after year if they meet credit and income qualifications. Note that chances for approval are significantly higher with a cosigner.

One drawback of doing business with Sallie Mae is that you won’t get a personalized rate until you apply. And while Sallie Mae doesn’t disclose credit requirements for all of their loans, the minimum credit score for approved undergraduate student loan borrowers is 748.

If you’re a parent, APRs are comparatively higher than for undergrad and grad students. Fixed-rate parent loans range from 5.49% to 13.87% APR and variable rates go up to 12.99%.

Repayment options and fees

As a Sallie Mae borrower, you can choose from interest-only, fixed-monthly repayment options or and defer payments while in school. You can also get a 0.25% interest rate discount for enrolling in autopay and the option to enroll in the Graduated Repayment Period for any loan.

This program allows you to make interest-only payments for a year after graduation while you’re transitioning from school to your new career. All of Sallie Mae’s loans are 100% coverage, meaning that they help finance all of your education-certified expenses including travel, tuition, housing, books, fees, and your laptop.

Loans offered by Sallie Mae:

  • Undergraduate
  • Career training
  • Parent, K-12
  • Graduate
  • MBA
  • Medical school residency
  • Dental school residency
  • Health professions graduate
  • Law school
  • Bar study
  • Parent PLUS
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Credible
Best for Parents
Undergrad rates — Variable
0.99%–11.98%
Undergrad rates — Fixed
2.99%–12.99%
Graduate rates
Vary by lender
Undergrad rates — Variable
0.99%–11.98%
Undergrad rates — Fixed
2.99%–12.99%
Graduate rates
Vary by lender
Undergrad rates — Variable
0.99%–11.98%
Undergrad rates — Fixed
2.99%–12.99%
Graduate rates
Vary by lender
Pros
  • Compare multiple loan offers with a single loan application
  • Get prequalified online without a hard inquiry
  • No origination fee, service fees or prepayment penalties
  • Finance any type of degree
  • Apply with or without a cosigner
Cons
  • Most Credible partner lenders require a minimum credit score of 680
  • Specific programs, APR rates, terms and conditions may vary depending on the lender
  • Does not service its own loans

Credible is a free online marketplace where you can compare rates and terms from multiple private student loan providers at once. The platform features a pre-qualification tool that gives potential borrowers personalized rates.

When you request personalized rates from Credible, the platform will conduct a soft credit inquiry to provide you with a list of student loan offers within your budget. This inquiry has no effect on your credit score.

The platform partners with private student loan lenders like Ascent, Citizens Bank, Discover, College Ave, EDvestinU, INvestEd, MEFA and Sallie Mae.

Most Credible partner lenders ask for a minimum credit score of 680 to qualify for a loan. Additionally, student loan rates may start at 2.94% fixed APR and 0.99% variable APR for those with excellent credit.

As this is a marketplace, specific programs, APR rates, terms and conditions depend on the lender you choose.

Repayment options and fees

The platform partners with private student loan lenders like Ascent, Citizens Bank, Discover, College Ave, EDvestinU, INvestEd, MEFA and Sallie Mae.

One benefit of comparing lenders with Credible is that it doesn’t partner with lenders that charge origination fees, or prepayment penalties on their student loans.

Loans offered by Credible partners

  • Undergraduate
  • Graduate
  • Parent student loans
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Undergrad rates — Variable
1.11%–11.22% APR with autopay discount
Undergrad rates — Fixed
3.49%–10.66% APR with autopay discount
Graduate rates — Variable
1.09%–11.33% APR with autopay discount
Graduate rates — Fixed
4.13%–10.90% APR with autopay discount
Undergrad rates — Variable
1.11%–11.22% APR with autopay discount
Undergrad rates — Fixed
3.49%–10.66% APR with autopay discount
Graduate rates — Variable
1.09%–11.33% APR with autopay discount
Graduate rates — Fixed
4.13%–10.90% APR with autopay discount
Undergrad rates — Variable
1.11%–11.22% APR with autopay discount
Undergrad rates — Fixed
3.49%–10.66% APR with autopay discount
Graduate rates — Variable
1.09%–11.33% APR with autopay discount
Graduate rates — Fixed
4.13%–10.90% APR with autopay discount
Pros
  • $400 discount on SAT/ ACT prep courses for family members of SoFi clients
  • Unemployment Protection Plan allows you to suspend loan payments for up to 12 months
  • No cosigner required to apply
  • Personalized career advice through SoFi's exclusive Career Services
Cons
  • A minimum credit score of 680 for eligibility
  • Interest will accrue during each three-month forbearance period
  • Cosigners can only be removed through a loan refinance
  • Minimum loan amount is $5,000 for undergrad and graduate student loans

SoFi considers professional history, cash flow and history of financial responsibility when you apply for its student loans. To be eligible, you must also be enrolled at least half-time in an accredited four-year degree-granting institution.

As a SoFi member, you’ll gain access to partner-offered benefits, including a Personal Financial Fundamental specialization course on Coursera, Grammarly Premium access for three months and Best of Evernote for six months. These benefits are not available to residents of Ohio.

Repayment options and fees

SoFi offers flexible repayment options for all student loan borrowers, including unemployment protection (forbearance) for those who lose their job through no fault of their own and whose loans are in good standing. Interest will accrue during each three-month forbearance period, but you have the option of making interest-only payments during that time.

Additional repayment options include deferred payments for six months after graduation, interest-only payment during school, fixed $25 monthly payments during school and full monthly payments post-graduation.

With SoFi, there are no application or origination fees tied to your private student loan. There are also no prepayment penalties. Additionally, SoFi borrowers can get exclusive rate discounts of up to 0.25% if they subscribe to automatic monthly payments.

Loans offered by SoFi

  • Undergraduate
  • Graduate
  • MBA
  • Law school
  • Parent PLUS
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Undergrad rates — Variable
1.50% - 11.33%
Undergrad rates — Fixed
2.97% - 12.95%
Graduate rates —Variable
1.48% - 11.08%
Graduate rates — Fixed
2.91% - 12.95%
Undergrad rates — Variable
1.50% - 11.33%
Undergrad rates — Fixed
2.97% - 12.95%
Graduate rates —Variable
1.48% - 11.08%
Graduate rates — Fixed
2.91% - 12.95%
Undergrad rates — Variable
1.50% - 11.33%
Undergrad rates — Fixed
2.97% - 12.95%
Graduate rates —Variable
1.48% - 11.08%
Graduate rates — Fixed
2.91% - 12.95%
Pros
  • No application, origination, disbursement, or early repayment fees
  • 1% cash back graduation reward
  • Receive up to $525 for each friend you refer through the Refer a Friend Program
  • Non-Cosigned Outcomes-Based Loan is available for undergraduate juniors or seniors who do not have a cosigner
  • Start payments up to 9 months after graduation
  • Pre-qualify online without affecting your credit score
Cons
  • Higher interest rates compared to most private lenders
  • International students can't apply for cosigner release
  • Students must meet minimum credit requirements

Ascent is one of the few private lenders that offer a loan program that bases eligibility on factors like academic performance (GPA), school, program and major. It's also one of the few lenders that specifically advertise no-cosigner student loans options for DACA students and international students, as well as personal loans for financial aid officers.

Ascent’s Non-Cosigned Outcomes-Based Loan is available for undergraduate juniors or seniors who don’t have a cosigner and don’t meet minimum credit requirements. This loan targets aspiring graduates that are about to enter the workforce and have a minimum GPA of 2.9.

If you have school loans without a cosigner as a junior or senior, you can only repay them after you graduate, with loan terms lasting between 10 and 15 years. To qualify for loans that do require a cosigner, you have to be enrolled in school at least half-time.

Repayment options and fees

Ascent borrowers have flexible repayment options, including deferred payments up to nine months after leaving school, $25 monthly payment while in school, interest-only repayment while in school and forbearance and deferment options from 1 to 36 months (depending on the type of loan).

With Ascent, there are no origination, application, disbursement or prepayment penalties tied to undergraduate or graduate private student loans.

Ascent also allows customers to apply for cosigner release after 24 consecutive on-time payments. Additional perks include 1% cashback and a 0.25% discount for automatic debit payments.

Loans offered by Ascent

  • Cosigned Credit-Based loan
  • Non-Cosigned Credit-Based loan
  • Non-Cosigned-Outcomes-based loan (for juniors and seniors)
  • MBA
  • Law
  • Dental
  • Medical
  • PhD
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ADVERTISEMENT
Undergrad rates — Variable
1.49%–7.66% with autopay
Undergrad rates — Fixed
3.99%–8.49% with autopay
Graduate Rates
Vary by lender
Undergrad rates — Variable
1.49%–7.66% with autopay
Undergrad rates — Fixed
3.99%–8.49% with autopay
Graduate Rates
Vary by lender
Undergrad rates — Variable
1.49%–7.66% with autopay
Undergrad rates — Fixed
3.99%–8.49% with autopay
Graduate Rates
Vary by lender
Pros
  • Partners with credit unions and community banks
  • Services loans itself and offers in-house customer service
  • Offers a cosigner release option after 12-36 on-time payments
  • $200 referral bonus for each person you recommend who signs up
  • Less 23 student loan-related complaints with the Consumer Financial Protection Bureau (CFPB)
Cons
  • Those with credit scores below 660 or incomes lower than $24,000 must apply with a cosigner

LendKey is a loan marketplace that partners with over 13,000 community banks and credit unions. If you prefer doing business with regional lenders and co-ops, LendKey could be an option for you.

Unlike other marketplaces, LendKey services loans and offers in-house customer service. That means partner lenders issue loans through LendKey’s automated digital platform and the company takes care of interactions with customers, which translates into lower rate offers for qualified borrowers.

Loans obtained through LendKey can be used to finance education-related expenses certified by your institution. This includes room and board, tuition, fees, transportation, laptop and textbooks.

Since LendKey works with community banks and credit unions, rates and terms may vary significantly. Some financial institutions may ask you to meet additional loan eligibility requirements in order to qualify for their student loan products.

Applications are credit-based, so if you don’t meet eligibility criteria you must be prepared to have a cosigner. Supporting documentation for cosigners includes proof of income, permanent address or social security identification.

To be eligible for a private student loan through LendKey, you must be a U.S. citizen or permanent resident, be of legal age in your state of residence and be enrolled at least half-time in a degree-granting program or approved school.

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.

Loans offered by LendKey

  • Undergraduate
  • Graduate
  • Student loan refinance
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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.

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.

Final loan awards can’t exceed loan limits set by the federal government, but the school may award you less than what you request.

The federal government limits how much a student can borrow annually and over their entire college career across different categories:

  • Academic year
  • Loan type
  • Undergraduate and graduate studies
  • Independent or dependent student

Benefits of federal loans include:

  • Lower interest rates
  • Subsidized interest payments
  • Forbearance
  • 6-month grace period after graduation
  • Income-driven repayment plans.
  • Possibility of loan forgiveness

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.

Student loan terms

Federal student loan terms are set by law, while private student loan repayment plans are determined by the lender. 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 anf 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.

Federal student loans vs. private student loans

The following are some of the benefits and drawbacks of federal and private student loans.

Benefits of federal student loans

  • The government funds federal student loans and parent loans
  • Terms and conditions are set by law
  • Income-driven loan repayment plan options
  • Opportunities for student loan forgiveness
  • No credit check
  • Fixed rates, low-interest rates and flexible repayment options
  • Free application process

Drawbacks of federal student loans

  • Only available to U.S. citizens
  • Subsidized loans are need-based
  • Subsidized interest only applies to undergraduate students
  • No statute of limitations on loan collections

Benefits of private student loans

  • Available to U.S. citizens and qualifying international students
  • No financial need requirements
  • Fixed and variable rates
  • Higher borrowing limits

Drawbacks of private student loans

  • Each bank sets its own terms and conditions
  • Limited repayment options and hardship assistance programs
  • No student loan forgiveness opportunities
  • Requires credit check
  • Origination, application, and early payment fees may apply
  • No student loan forgiveness opportunities
  • Online pre-qualification availability varies by lender
  • The government and your school limits the loan amount

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.

If you’re considering private loans, take the time to evaluate your credit 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.

If you need to improve your credit before applying for a private student loan, start with our credit repair guide or check out our best credit repair companies if you don't want to DIY it

2. Look into federal loans

We recommend you consider federal loans first, as they have several advantages over private loans.

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.

Student loan application checklist

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 actually make your financial situation worse.

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

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.

These options may not be the best fit for everyone, however. Learn more through our article on how to refinance your student loans and our list of best student loan refinance companies.

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.

Student Loans and COVID-19

  • The Department of Education established a temporary suspension of monthly payments and 0% interest rates. Federal student loan relief is set to expire on January 31, 2021.
  • Delinquency will not be reported during this period even if you don’t take part in the payment suspension program.
  • Private lenders are exempt from federal legislation, but they offer different options for borrowers struggling with payments, including modified payment plans, forbearance and deferment. Contact your financial institution to ask which options are available to you.
Student Loan FAQ
How do student loans work?
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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 student loans 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?
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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 is a private student loan?
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A private student loan is a loan offered by banks and credit unions to cover tuition and other related expenses. They are available to parents and students and feature either variable or fixed interest rates and different repayment options. To qualify for a private student loan, applicants must have good credit or apply with a qualifying cosigner.
What happens if you don't pay student loans?
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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 Student Loans and Covid-19 for more information about payment options and other changes related to the coronavirus pandemic.

What are the best student loans?
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Federal student loans and other forms of student financial assistance should be the main options for students to afford tuition and other related college expenses.

If you have exhausted your federal student loans and federal financial aid, then private student loans are the next best option. Check out our Best Private Student Loans Reviews for more information.

Do student loans affect credit scores?
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Student loans function as any other type of installment loan would. This means that if you do not make on-time payments or default on your loan, your credit score and credit history can be negatively impacted. They will also impact your debt-to-income and debt-to-credit ratios.

Private student loans are not backed by the government, so if you default on a loan your loan servicer or lender may sell your account to a collection agency. According to Experian, collections will appear on your credit report and are flagged as derogatory accounts.

It's also best practice to be responsible with your monthly payments. Any missed payments are reported as delinquencies to the credit bureaus and remain on your credit report for up to seven years.

When do student loan payments resume?
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The U.S. Department of Education extended the moratorium on federal student loan payments and interest through January 31, 2022. The final extension was announced in August 2021.

Unfortunately, this rule is not applicable to private student loans.

What happens to student loans when you die?
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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.

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 offer flexible repayment options, low or no processing fees, competitive interest rates and cosigner release options.

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 compare loan offers from multiple lenders in one place.

Summary of Money’s Best Student Loans of August 2021

  • College Ave – Best Overall
  • Sallie Mae – Best for Graduate Students and Non-degree Granting Schools
  • Credible – Best for Parents
  • SoFi – Best for No Fees and Discounts
  • Ascent – Best for Borrowers Without a Cosigner
  • LendKey – Best Marketplace