Student loans are a big deal when entering college and university because you’ll likely need to take out student loans to pay for them. Whether your college plans involve heading to campus or logging on for online learning, one thing is certain: You will need a way to pay.
To anyone new to students loans, there are two types; federal student loans and private student loans. There are vast differences between the two but primarily, federal student loans are often the most affordable way to borrow, they may not be enough to cover all of your college costs. Private student loans, as well as grants and work-study programs, can cover the gap between what you need and how much you can afford to pay toward your college expenses.
According to the College Board, in 2021–2022, the average cost of tuition and fees at a public university for an in-state student was $10,740. The cost jumped to $38,070 for a private school.
But be cautious about borrowing too much. “With so much uncertainty regarding college campuses and … class schedules, planning for expenses is not an easy task,” says Bruce McClary, vice president of marketing for the National Foundation for Credit Counseling and a U.S. News contributor.
It’s best to exhaust all of your federal student loan options before even considering private student loans. Rates for federal loans issued between July 1, 2021, and June 30, 2022, are just 3.73% for undergraduate Direct Subsidized and Unsubsidized loans.
But which lenders offer the lowest rates and the most robust benefits? We’ve compiled a list of the best federal and private student loan lenders available today to help you find the best option for you.
This guide can help you navigate the school year. What you’ll learn here:
Wikipedia defines a student loan as a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.
A Student Loan is a smart way of covering your college costs. There’s no shortage of expenses in college life.
Student loans are similar to mortgages in that they are usually considered “good debt.” Both are large amounts of money that take a long time to pay back. By paying it back each month, you show the lender your ability to repay a loan and prove your creditworthiness, which can in turn increase your credit score.
In addition, you “get” something from good debt. In the case of a mortgage, you get a house and the value of that house generally increases over time. With student loans, you get a college education, which increases your lifetime earning potential. This is why these two types of debt are good debt, rather than bad debt.
Typically, student loans fall into two major categories: federal and private. Private loans are also called alternative loans.
Federal student loans: There are multiple types of federal loans but, in general, they have lower interest rates and better repayment terms than private loans. They’re also more readily available and may be easier to obtain than a private loan. They have fixed interest rates and some options aren’t dependent on your credit history.
Private student loans: These should be looked into after federal student loans are exhausted. Private student loans may cover continuing education without a degree, tuition for non-U.S. citizens, and for education costs incurred after graduation.
In a recent interview with Carrie Johnson, an Accredited Financial Counselor (AFC®) and an associate professor at North Dakota State University, she said “Federal student loans have many repayment benefits. For example, there are forgiveness options for certain occupations or in the event of a disability. If a borrower is struggling to make payments, there are options to suspend payments for a period of time. Private student loans do not offer these benefits and in many cases, if a borrower passes away, their cosigner is then responsible for the remainder of the loan balance.”
Student loans are money borrowed from the government or a private lender to pay for college. The loan has to be paid back after graduation, along with the interest that has been accrued. The loan can usually be used to cover tuition, room and board, books, and other school-related expenses. Student loans are different from scholarships and grants which don’t have to be paid back.
You can apply for a student loan online and fill out your financial information and that of your parents (if applicable). Student loan qualifications are different depending on the type of loan you receive but can include FICO score and income. Typically, you will need multiple student loans to cover your entire tuition and all related expenses. A financial aid counselor from your high school or your future college should be able to help you better navigate the process.
Pros:
Cons:
Pros:
Cons:
If you decide that a student loan isn’t for you or want to know what other options you have, there are some alternatives:
The main cost associated with student loans interests. However, some loans may also charge origination fees, prepayment penalties, and late fees. Federal loans tend to have lower interest rates so it’s best to apply for them first. Currently, the interest rate on federal student loans for undergraduates is 3.73%.2
Student loans can be expensive, with application fees and making monthly principal and interest payments. They can get especially expensive if you choose to go to grad, medical or law school in addition to a 4-year college. If you have an alternative way to pay for college, then it’s great to explore that first. Otherwise, student loans are generally worth the cost because you’re investing in yourself and your education, which should help you land a higher-paying job or acquire the knowledge and skills to start your own business.
There are so many federal and private student loans to choose from. We reviewed dozens of student loans and chose the best student loans based on their interest rates, types of loans offered, cosigner requirements, loan consolidation options, and the overall application process.
TheVibely based this article with reference from US News and Investopedia. Per U.S. News, it selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria, and customer service. Those with the highest overall scores are considered the best lenders.
In calculating the score, US News based on factors like customer service ratings, fixed APR, variable APR, loan product availability, minimum and maximum loan terms, minimum and maximum loan amounts, minimum FICO score, and online features to derive data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender. To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry.
Whereas Investopedia data is also based on private student loan lenders of undergraduate private student loans (as well as companies that refinance student loans) narrowed down from national banks, credit unions, and lenders.
The criteria for measuring each lender included all available APR ranges for these loans, fees charged, repayment plans and hardship options offered, and the inclusion of additional features such as cosigner release, parent loan availability, and a refinance option.
Investopedia speculates that the “best of” awarded the highest status to the lenders that are available nationwide that offered the lowest fixed APRs, the most comprehensive hardship programs, and the least number of fees.
The International Student Loan Program is available to international students from around the world who are looking to study in the USA. To be eligible, you have to be attending one of the approved schools, earning credit and you must also have a US citizen or US permanent resident to cosign the loan with you. International Student Loan offers funding that is disbursed directly to you with competitive interest rates and no application fees! Names of International loans include MPOWER Financing; Prodigy Finance; Citizens One; Ascent Student Loans, and Discover.
Below are short details and links to TheVibely‘s top ten (10) best student loans in 2022.
Before applying for a student loan, it’s smart to compare rates from several different lenders to ensure you get the best interest rate and loan terms. Instead of doing this process on your own, which can be frustrating and time-consuming, you can use a student loan marketplace to speed things up.
With Credible, you fill out a simple form and get rate quotes from multiple student loan lenders within minutes. Getting a quote doesn’t affect your credit score, and you can view multiple repayment options. Once you find a loan that works for you, you and your cosigner (if applicable) can complete the loan application online.
Using Credible is completely free. Credible gets a referral fee when you apply for a loan through a lender on its marketplace. Credible doesn’t include all private student loan lenders available, but it does have a range of top lenders, including Ascent, Citizens Bank, College Ave, and Sallie Mae.
Read the full review: Credible Student Loans
When looking for an undergraduate student loan, it’s important to pay attention to interest rates, loan terms, and lender perks that can improve your borrower experience. With those factors in mind, the Rhode Island Student Loan Authority (RISLA) stands apart as the best overall lender.
Despite its name, residents from any state can qualify for a RISLA loan. However, applicants who live, work, or attend college in Rhode Island may be able to get a lower interest rate than other borrowers.
Applicants can borrow $1,500 to $45,000 per year to pay for their undergraduate degrees. There are no application, origination, or prepayment penalties.
Unlike some other lenders, RISLA only offers fixed-rate loans. However, these loans have fairly low-interest rates. The interest rate on a loan with Student Immediate Repay is 2.99%, while a Student Deferred Repay loan has a rate of 4.74% (both include an autopay discount).
As an undergraduate borrower, you have 2 repayment options:
While RISLA offers low-interest rates and a variety of repayment plans, what really sets the lender apart is the benefits it provides borrowers:
RISLA provides families with information on how to find financial aid, including federal loans, grants, and scholarships. It also has programs that reward students for completing internships, helping them prepare for careers after graduation.
Read the full review: RISLA Student Loans
When you’re applying for a student loan, you can often choose between variable and fixed interest rates. While fixed-rate loans have the same interest rate for the duration of the repayment term, the interest rate on variable-rate loans can fluctuate over time. If you want to pay off your debt quickly, opting for a variable-rate loan can allow you to take advantage of the lower initial rate.
College Ave offers some of the lowest rates on undergraduate student loans:
With College Ave, you can borrow up to the total cost of attendance (COA). There are 4 different repayment options to choose from, along with 4 different term lengths, and you can defer your payments until after graduation or opt to make in-school payments.
College Ave offers the following repayment options:
Read the full review: College Ave Student Loans
Private student loan consolidation, also known as student loan refinancing, can be a smart way to lower your interest rate and save money over the life of your loan. Splash Financial is our pick for the top student loan refinancing company.
There are a couple of different factors that impacted our decision:
The minimum refinances loan amount is $5,000. There is no maximum loan amount—it will depend on the specific lending partner that refinances your loans and other factors in your loan application. In order to refinance through Splash Financial, you must have obtained a 4-year degree from a Title IV accredited institution or an associate degree in an eligible field.
Read the full review: Splash Financial Student Loan Refinancing
As a parent, you want what’s best for your child. And that may mean helping them pay for their education by taking out a parent-student loan.
College Ave offers 11 different repayment terms for parent student loans, ranging from 5 to 15 years in length. That flexibility allows you to choose the loan term that works best for your budget.
College Ave allows parents to borrow between $1,000 and the total COA. As an added perk, the lender allows you to get up to $2,500 of the loan delivered directly to you, so you can manage the purchasing of items such as books, dorm supplies, and a new computer for your student.
The lender also has low-interest rates, with variable rates as low as 0.99%, and fixed rates as low as 2.94% (lowest rates include an autopay discount). College Ave has three different repayment plans, so you can decide which is best for you:
Read the full review: College Ave Student Loans
Unfortunately, international students often struggle to find private student loans to pay for school, especially if they don’t have access to a cosigner who is a U.S. citizen. For those students, MPOWER Financing is the best lender.
MPOWER Financing offers undergraduate and graduate student loans to international students as well as U.S. citizens, permanent residents, and Deferred Action for Childhood Arrivals (DACA) students attending 350 approved colleges and universities in the U.S. and Canada.
MPOWER Financing doesn’t require applicants to have a cosigner, an established credit history, or collateral.
For international undergraduate students, you can borrow $2,001 to $25,000, with a $50,000 lifetime borrowing limit. The undergrad APR is 14.98% (12.94% for grad students), but you can qualify for up to 1.5% in rate discounts, including:
Both graduate and undergraduate loans require interest-only payments while you’re in school and during your 6-month grace period following graduation, and both have a 10-year repayment term.
Read the full review: MPOWER Financing Student Loans
As a college student who may not have an established credit history or any income, you can struggle to qualify for a private student loan on your own. If you don’t have a parent or relative to act as a cosigner, finding a lender who will approve your loan application can be difficult. For those who don’t have access to a cosigner, Funding U may be the best option.
Unlike some other lenders who offer non-cosigned loans to only college juniors and seniors, Funding U allows undergraduate students of all grade levels to qualify for a loan. You must be a U.S. citizen or permanent resident who is over the age of 18 and enrolled in a 4-year degree program at an eligible 4-year college. You can borrow between $3,000 and $15,000 per year. Your eligibility for a loan is based on your GPA (minimum varies by grade level), your project earnings, total debt, historical data from your school, and more.
The fixed interest rate on undergraduate student loans for the 2020-21 school year is 7.99% to 12.99%, which includes a 0.5% autopay discount. You can make either $20 minimum payments or interest-only payments each month you’re in school for up to 51 months. Loan repayment (principal plus interest) begins 6 months after graduation.
Unfortunately, Funding U only lends to residents of certain states. You must live in one of the following states to qualify for a loan: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin.
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%.
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.
Read for the full review: Sallie Mae
Discover is a national bank offering a wide range of consumer financial products, including student loans, credit cards, personal loans, home loans, and more.
With Discover, students who earn a GPA of 3.0 or higher in college or graduate school will be eligible for the reward of a good grade on each new Discover student loan. This reward is a one-time cash reward in which Discover will pay you one percent of your school-certified loan amount. If you’re an incoming freshman, you can qualify for the reward on your first Discover student loan with a high school GPA of 3.0 or higher.
The reward of a good grade isn’t the only benefit of borrowing with Discover. The bank has a long list of repayment benefits to help borrowers struggling to meet their monthly payments. These benefits include deferment options, a grace period extension, temporary interest or payment reductions, and more.
Why It’s One of the Best? Discover rewards students who earn at least a 3.0 GPA in high school, college, or graduate school with a one-time payment of one percent of your school-certified loan amount.
Are you interested in applying for a loan with Discover? You can apply in 15 minutes or less from your computer or mobile device by clicking here.
SoFi is a mobile-first online personal finance company based out of San Francisco, California. It made a name for itself in 2012 as the first company to refinance both federal and private student loans. Since then, it has expanded into nearly all consumer lending markets with over $50 billion in loans funded.
Without a doubt, one of the biggest draws to borrowing from SoFi is the wide range of benefits available to its members. These benefits fall into three categories: money, community, and career.
Money benefits include financial planning advice from credentialed advisors, referral bonuses, and member rate discounts. Community benefits include attending networking events, dinners, and happy hours. Career benefits include tools to help you earn a raise, personalized career advice, and an unemployment protection program.
Why It’s One of the Best? SoFi members enjoy a wide range of benefits, including a 0.125% rate discount, career coaching, unemployment protection, and more.
Are you interested in applying for a loan with SoFi? You can prequalify without impacting your credit in minutes by clicking here.
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