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Published: Nov 07, 2022 38 min read
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Best Overall
Best for Graduate Students and Non-degree Granting SchoolsBest for Parents$100 Statement Credit When You Link this Loan to a Candidly Account
College AveSallie MaeCitizens BankCollege Finance
Our PartnerOur PartnerOur PartnerOur Partner
Loan Types

Undergrad, Graduate (includingMBA, medical, dental, law), parent, career programs, Refinance

Undergrad, Graduate

Undergraduate, Graduate, Parent, Refinance, Refinance for parents

Private student loan, student loan refinancing (marketplace)

Undergraduate Rates (with Autopay)

Fixed: 3.99% –14.96% Variable: 3.24% – 14.86%

Fixed: 3.25% - 13.59% Variable: 4.00% – 14.34%

Fixed: 4.74% – 12.06% Variable: 3.75% – 11.21%

Fixed: 3.99% –14.96% Variable: 3.24% – 14.86%

Graduate Rates (with Autopay)

Fixed: 4.24% – 12.99% Variable: 3.99% – 12.99%

Fixed: 4.25% – 12.92% Variable: 4.50% – 14.10%

Fixed: 5.72% – 11.74% Variable: 4.25% – 10.74%

Fixed: 4.24% – 12.99% Variable: 3.99% – 12.99%

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.

No application, origination, or disbursement fees

Varies by lender

Best Overall
College Ave
Our Partner
Get Started
Loan Types

Undergrad, Graduate (includingMBA, medical, dental, law), parent, career programs, Refinance

Undergraduate Rates (with Autopay)

Fixed: 3.99% –14.96% Variable: 3.24% – 14.86%

Graduate Rates (with Autopay)

Fixed: 4.24% – 12.99% Variable: 3.99% – 12.99%

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
Get Started
Loan Types

Undergrad, Graduate

Undergraduate Rates (with Autopay)

Fixed: 3.25% - 13.59% Variable: 4.00% – 14.34%

Graduate Rates (with Autopay)

Fixed: 4.25% – 12.92% Variable: 4.50% – 14.10%

Fees

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

Best for Parents
Citizens Bank
Our Partner
Get Started
Loan Types

Undergraduate, Graduate, Parent, Refinance, Refinance for parents

Undergraduate Rates (with Autopay)

Fixed: 4.74% – 12.06% Variable: 3.75% – 11.21%

Graduate Rates (with Autopay)

Fixed: 5.72% – 11.74% Variable: 4.25% – 10.74%

Fees

No application, origination, or disbursement fees

$100 Statement Credit When You Link this Loan to a Candidly Account
College Finance
Our Partner
Get Started
Loan Types

Private student loan, student loan refinancing (marketplace)

Undergraduate Rates (with Autopay)

Fixed: 3.99% –14.96% Variable: 3.24% – 14.86%

Graduate Rates (with Autopay)

Fixed: 4.24% – 12.99% Variable: 3.99% – 12.99%

Fees

Varies by lender

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 after you’ve hit the federal borrowing limit and 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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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 for undergraduate loans
  • Subsidized interest payments
  • Easy to access forbearance
  • 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 offers forbearance plans for borrowers in financial hardship.

Pros
  • Undergraduate interest rates start at 3.24%
  • Choice of 5-15 year repayment terms
  • Prequalification with a soft credit pull
  • Students with career loans receive $150 when completing their degree
Cons
  • $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

RATES

  • Undergrad rates — Variable: 3.24%–14.86% with autopay discount
  • Undergrad rates — Fixed: 3.99%–14.96% with autopay discount
  • Graduate rates — Variable: 3.99%–12.99% with autopay discount
  • Graduate rates — Fixed: 4.24%–12.99% with autopay discount

College Ave Student Loans offers private loans for students, international students and parents. Borrowers can receive a College Ave loan if they’re enrolled at least part time, as long as they’re registered at a qualifying institution and show satisfactory academic progress.

College Ave finances up to 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.

Basic Requirements

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 experiencing a 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 doesn’t charge an application fee, origination fees or prepayment penalties. Its late payment fee is 5% or $25.

Read full review>>

Why we chose it: With Sallie Mae, graduate student borrowers can make interest-only payments for a year after graduation or receive up to 48 months of deferment if they’re participating in an internship, clerkship, fellowship or residency program.

Pros
  • 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
Cons
  • No information available about credit score requirements
  • No loan prequalification option

RATES

  • Undergrad rates — Variable: 4.00%–14.34% with autopay discount
  • Undergrad rates — Fixed: 3.75%–13.72% with autopay discount
  • Graduate rates — Variable:4.50%–14.10% with autopay discount
  • Graduate rates — Fixed: 4.25%–12.92% with autopay discount

Sallie Mae loans are available to students in undergraduate and graduate programs, as well as students attending a career training or non-degree program. 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 10 business days or less for the loan to be disbursed to your school. Variable interest rates for the Smart Option Student loan start at 4.00% and fixed interest rates start at 3.75%, both with the autopay discount.

In addition to undergraduate, career training, and graduate loans, Sallie Mae also offers loans for MBA, medical school residency, dental school residency, health professions, law school and bar study.

Basic requirements

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 and mortgage or rent payments
  • Provide income and employment information (cosigner or student)

Repayment options and fees

Borrowers can choose from interest-only or flat-monthly payments while in school, or they can choose to defer payments while in school.

After graduation, Sallie Mae’s Graduated Repayment Period allows borrowers 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).

Read full review>>

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.

Pros
  • Apply with or without a cosigner
  • No origination fee, service fees or prepayment penalties
  • No separate application for Multi-Year Approval
  • Easy-to-use student loan calculator
Cons
  • Long period to qualify co-signer release, with 36 consecutive, on-time payments
  • No prequalification

RATES

  • Undergrad rates — Variable: 3.25%–11.21%
  • Undergrad rates — Fixed: 4.74%–12.06%
  • Graduate rates — Variable: 4.25%–10.74%
  • Graduate rates — Fixed: 5.72%–11.74%
  • Parent loan rates — Fixed: 6.61%–12.00%
  • Parent loan rates — Variable: 5.61%–11.00%

Citizens Bank offers student, parent and refinance loans. With Citizens, parents can apply for loans with interest rates starting at 5.61% for a variable APR and 6.61% 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, so they have to consent to a hard credit inquiry to see the rates they’re eligible for. 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, and the interest rate may change, but requests don’t require additional documentation or a hard credit check inquiry for approval.

Citizens Bank offers loans for undergraduate students, graduate students and parents, and has specialized loans for the following programs: MBA, law, medical, dental, bar study and medical residency.

Eligibility requirements

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 make payments while in-school or apply for a 6 months loan deferment after graduation. Repayment terms go from 5- to 20 year-term.

This lender doesn’t charge any origination, disbursement or prepayment fees. Citizens Bank’s 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.

Pros
  • Prequalification with a soft credit check
  • No origination fee or prepayment penalties
  • Guarantees lowest interest rate
Cons
  • Doesn't include all major lenders
  • APR rates, loan terms and repayment options depend on the lender
  • Not all Credible partners offer cosigner release

RATES

  • Undergrad rates — Variable: 2.99%-14.86%
  • Undergrad rates — Fixed: 3.65%-14.96%
  • Graduate rates: Vary by lender

Credible isn’t a lender. It is a free online marketplace that partners with private student loan lenders like Ascent, Citizens Bank, College Ave, EdvestinU, INvestEd, Custom Choice, 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 Best Rate Guarantee 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 amounts and credit score requirements vary by lender.

Credible offers undergraduate, graduate, parent, medical school, law school and MBA loans.

Eligibility requirements

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 payments. Some lenders also offer forbearance for those borrowers who want to delay repayment until after graduation.

This marketplace doesn’t charge any origination fees or prepayment penalties.

Read full review>>

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.

Pros
  • 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
Cons
  • Only students attending four-year schools are eligible for loans
  • Minimum loan amount of $5,000

RATES

  • Undergrad rates — Variable: 3.75%–12.13% APR with autopay discount
  • Undergrad rates — Fixed: 3.99%–13.50% APR with autopay discount
  • Graduate rates — Variable: 4.25%–12.13% APR with autopay discount
  • Graduate rates — Fixed: 4.50%–13.50% 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 company’s 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 a 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.

Eligibility requirements

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 an 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 delay paying their loans until six months after graduation.

Along with no late fees, SoFi also does not charge application, origination or prepayment fees.

Read full review>>

Why we chose it: We chose Discover as a runner-up for best for no fees and discounts because it doesn’t charge any fees, including late payment fees, for its student loans.

Pros
  • No application, late fees or prepayment penalties
  • Cash reward for earning good grades
  • 24/7 U.S.-based customer service
Cons
  • No cosigner release
  • Only one repayment term
  • Doesn't offer online preapproval

RATES

  • Undergrad rates — Variable: 4.49%-14.09%
  • Undergrad rates — Fixed: 5.49%-13.99%
  • Graduate rates —Variable:5.49%-15.49%
  • Graduate rates — Fixed: 5.49%-14.99%

Discover is mostly known for its credit cards and home loans. However, it also offers student, parent and consolidation loans. (Consolidation loans are what Discover calls its refinance loans.) Undergraduate and graduate students can apply for a fixed- or variable-rate student loan through Discover’s online platform or over the phone. Unlike some other lenders, Discover doesn’t offer online prequalification, so applicants have to submit a full application with a hard credit check to access rates.

None of Discover’s loans charge origination fees, application fees, late fees or prepayment penalties. Most students will need a creditworthy cosigner on their loan application to qualify. However, be aware that Discover doesn’t offer cosigner releases. The cosigner remains responsible for the loan if you fall behind on your payments until the loan is paid in full. To release your cosigner, you will need to refinance your loan.

Discover has 24/7 U.S.-based customer service over the phone and online educational resources.

Eligibility requirements

To apply for a private student loan with Discover, student borrowers must:

  • Be a US citizen, permanent resident or international student
  • Be at least 16 years old
  • Be enrolled in a bachelor’s or associate’s degree program at a qualifying institution
  • Have satisfactory academic progress
  • Pass a credit check

Repayment options and fees

Discover only offers a 15-year term for student loan repayment. This lender doesn’t charge any application, origination, disbursement, prepayment or late fees.

Read full review>>>

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.

Pros
  • 1% autopay discount for Non-Cosigned Outcomes-Based loans
  • Defer payments until up to nine months after graduation
  • 1% Cash Back Graduation Reward
  • DACA students can apply without a cosigner
Cons
  • International students can't apply for cosigner release
  • Strict borrowing limits on some loans

RATES

  • Undergrad rates — Variable: 3.04% - 11.55%
  • Undergrad rates — Fixed: 4.12% - 14.27%
  • Graduate rates —Variable: 4.04% - 13.30%
  • Graduate rates — Fixed: 5.12% - 14.75%

Ascent is one of the few private lenders offering non-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 to full-time junior and senior students. 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 also 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.

Undergraduates, graduates and students enrolled in a MBA, dental, medical and PhD programs. It also has a separate outcomes-based loan for juniors and seniors working toward their bachelor’s degree.

Basic requirements

To apply for a student loan with Ascent, borrowers must:

  • Be a U.S. citizen, DACA recipient, or U.S. 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 are:

  • Full payment
  • $25 monthly payment
  • Interest-only payment
  • Forbearance and deferment options from 1 month to 36 months

Ascent offers a wide range of repayment terms (5-, 7-, 10-, 12-, 15-, and 20-year terms). Borrowers can defer full principal and interest payments until nine months after graduation.

Read full review>>

Why we chose it: We chose LendKey as the best marketplace because it partners with a large network of loan providers and the company also services student loans.

Pros
  • Partners with credit unions and community banks
  • Services loans and offers in-house customer service
  • Some lending partners offer a cosigner release after 12 on-time payments
  • $200 referral bonus with Refer and Earn program
Cons
  • Aggregate and lifetime borrowing maximums apply
  • Only one (10-year) repayment option

RATES

  • Undergrad rates — Variable: 3.97% - 8.49% with autopay
  • Undergrad rates — Fixed: 3.99% - 8.49% 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 the loans borrowers take through its marketplace and offers in-house customer service. In other words: it will not underwrite or disburse your loan, but it 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. Some lenders on Lendkey’s marketplace offer it after 12 months of payments, while others require up to 48 months.

Lendkey offers undergraduate, graduate, and student refinance loans.

Eligibility requirements

To apply for a loan through LendKey, students must:

  • Be a U.S. citizen or permanent resident
  • Be enrolled at least half-time in an eligible school
  • Be the age of majority
  • Have a credit score or cosigner

Repayment options and fees

Repayment options for LendKey’s student loans include flat monthly payments and interest-only payments while in school, and a six-month grace period after leaving school.

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.

Read full review>>

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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.

Table of contents:

How do student loans work?

Student loans are issued by the federal government or private lenders to help students pay for undergraduate or graduate studies. The loan goes toward 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 some federal loans have more flexible terms. Repayment options include deferment, interest-only, or full payment.

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:

  • Direct Subsidized
  • Direct Unsubsidized for Undergrads
  • Direct Unsubsidized for Grads
  • Grad PLUS
  • Parent PLUS

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

Pros Cons
Terms and conditions are set by law Subsidized loans are need-based
Income-driven loan repayment plan options Subsidized interest only applies to undergraduate students
Opportunities for student loan forgiveness No statute of limitations on loan collections
Fixed rates, low interest rates and flexible repayment options Disbursement fees for parents (for parent loans, over 4%)
Free application process Strict borrowing limits that apple per year and over the student’s lifetime

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 any remaining balance from the loan directly from the school after covering tuition, fees and student housing.

Most private lenders suggest borrowers start loan repayment while still in school, but most offer in-school deferment or grace periods, although interest will continue to accrue.

Pros and cons of private student loans

Pros Cons
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 Requires credit check
Higher loan limits for undergraduate loans Origination and application fees may apply
No student loan forgiveness opportunities

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

Private student loan terms

While in school, most 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

Once you’re out of school, the repayment plans are standard “balance-based” ones, meaning your monthly payment is based on how much you owe plus interest; and you pay an equal amount each month over a period of 5, 7, or 10 years.

Lenders also may offer grace periods and forbearance to students who cannot make their monthly payments. However, the student loan interest rates 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, room and board, etc.) and then factor in additional living expenses. Money’s Best Colleges in America 2022 contains information about admission, costs, financial aid and graduation rates 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. If you have a cosigner, lenders will also consider their credit for approval.

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 and 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 College Board before you apply for private student loans. Other options may be 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 a 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 such as 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:

To apply for private student loans you will need:

  • Social Security number
  • Tax returns and income employment information
  • Rent or mortgage docs
  • Financial information from your cosigner
  • Application submitted 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 private loan forgiveness and many of the existing federal forgiveness programs can be complicated to navigate.

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 accrued interest 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

In August, President Joe 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.

Borrowers will have to share their Social Security number, date of birth and contact information to apply. The application is available in both English and Spanish, and it’s accessible on desktop and mobile devices. In November, the Education Department said that student loan repayments will restart on June 30, 2023, 60 days after it is legally allowed to proceed with the Biden administration's debt cancellation program, pending a court decision.

Aside from the Biden administration’s plan for a sweeping one-time loan cancellation, federal loans are also 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 toward your student loan debt.

Consider refinancing and debt consolidation

Student loan refinance can be a good option if you already have private loans, but it’s not always a smart move for those with federal loans. 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 toward your principal

Calculate the maximum you can afford to pay each month toward your principal loan amount. If you can pay more than what you owe each month, that’s the best way to pay off your loans quicker. When you pay extra, the additional money goes directly to reducing your principal debt.

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 toward your smallest debt and make minimum payments toward the rest. This can keep you motivated by helping you get rid of smaller debts quickly. Tackle debt with a higher 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

  • 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 June 30, 2023. If you plan on tackling your student loan debt for good, check out our tips on how to pay off student loans fast.

Student Loan FAQ

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 1, 2023. The final extension was announced in August.

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

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 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

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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 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.

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 the Unemployment Protection Program from SoFi, which 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. The government will still take that money from you. It could be taken out of your tax return, garnish your wages and even take it from your Social Security payments when you retire. 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?

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A private student loan is a type of loan offered by banks and credit unions to cover tuition and other related expenses. It's available to parents and students and features 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.

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 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 get 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.

Summary of Money’s Best Student Loans of November 2022

  • 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