Best Student Loans

Need help deciding the Best Student Loans for you? Deciding between Federal Loans and Private Loans? This article will help you choose the best loans available in the market.

Updated by C Laltlanhlua on 9th July 2019

In today’s student loan market, there are multiple options to choose from. We have Federal Direct Loans with exclusive benefits but limited loan amounts. Then there are great loan offers from private lenders with their own perks.

The market understands student loans play a very important part in financing higher education for students. Scholarships and grants are better options for finance but they are limited and do not always cover the entirety of college expenditures. Hence, Student Loans become the next best option.

If you are shopping around to find the best student loans available for you, we have got you covered. In this article, we will talk about various student loan options and where to start looking. On top of that, we will also provide suggestions on which loans to opt first and why.


List of contents


Best Federal Student Loans

Federal Student Loans are loans offered by the U.S. Department of Education to students who are pursuing higher education. They come with much lower rates compared to other options in the student loan market. They also come with several borrower benefits that cannot be found in their counterparts.

The different loans available this option are as follows.

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Direct PLUS Loans - Grad PLUS Loans and Parent PLUS Loans

Federal Student Loans are the best options after scholarships and grants. Students must complete the FAFSA in order to apply for these loans. We strongly recommend you consider this option before looking into any private loans.

The best Federal Student Loans for an individual will depend on their eligibility. The best loan for you will be the one which will cost you the least amount of repayment throughout the life of the loan. So know your loan options in detail and choose one accordingly.


Subsidized vs. Unsubsidized Loans

Subsidized Loans are offered only to undergraduate students who can provide proof of financial need. For these loans, the federal government will pay the interest fees when in school, during the grace period and when in deferment. That means that students do not have to worry about the interest of the loan during this period.

Unsubsidized Loans are offered to undergraduate as well as graduate students without the need for proof of financial need. It has a higher interest rate for graduate students as compared to undergraduate students. Moreover, the students are responsible to pay for the interest of the loan. If you choose for deferred payment, you need not pay for the loan while in school or during the grace period. However, the unpaid interest will accrue and be capitalized.

Ultimately, the amount to be repaid is much lower in the case of subsidized loans considering all the interest paid by the government. However, it is only offered to undergraduate students who can provide proof of financial need. In case you do not fall under this category, Unsubsidized Loans are still a very good option.


Unsubsidized Loan vs. Grad PLUS Loan

Direct Unsubsidized Loans are the next best options for undergraduate students, who cannot provide proof of financial need and graduate students. Students need to complete the FAFSA in order to be considered for this loan. Moreover, credit checking is not required as eligibility is not affected by credit score or credit history.

Grad PLUS Loans are Direct PLUS Loans given to graduates and professional students. Credit checking is done for every student applying for this loan. Applicants with adverse credit history need to either provide an endorser with no adverse credit history or show that there are extenuating circumstances to the adverse credit history.

The interest rates and fees in Unsubsidized Loans are much lower than the Grad PLUS Loans. Which means that students will end up paying a much lesser amount in repayment of the loan.


Parent PLUS Loans

If you are a parent who is planning to provide financial support to your child for their higher studies with loans, you should consider the Parent PLUS Loans. Parent PLUS Loans are Direct PLUS Loans given to parents.

Credit checking is required for this loan. For parents with adverse credit history, you may add an endorser or provide documentation to the satisfaction of the US Department of Education that the cause of the adverse credit history are extenuating circumstances.

The interest rate as of 1st July 2019 is 7.08%. In comparison to private loans, which can go as high as 13%+, the interest rate is much lower. On top of that, Parent PLUS Loans come with several borrower protection benefits that are offered under federal loans.


Interest Rates and Fees of Federal Student Loans

Federal Student Loans are funded and guaranteed by the US Department of Education. Information in this table shows the rate of interest on various types of loans for the time period of July 1, 2019, to July 1, 2020.

Type of loan

Borrower

Rate of Interest 

Loan Fees

Direct Subsidized Loans

Undergraduate

4.53%

1.059%

Direct Unsubsidized Loans

Undergraduate

4.53%

1.062%

Direct Unsubsidized Loans

Graduate or Professional

6.08%

1.062%

Direct PLUS Loans

Parents,

Graduate or Professional

7.08%

4.236%


Best Private Student Loans

Private Loan has become one of the major ways of financing higher education. This type of loan is provided by private institutions like banks, online lenders, credit unions, etc.. The option of obtaining private loans has become common for students who have exhausted their savings, grants, scholarships and federal loans. 

The features of private loans vary widely since each private lender is capable of providing a product depending on their targeted borrowers. The best Private Student Loan will differ from individual to individual depending on the requirement of each individual and the loans providing them.

How to choose the Best Private Student Loan

The following are the major factors that students must consider when choosing the Best Private Student Loan.

1 - Eligibility

When borrowing student loans, it is best to borrow the ones where you are eligible without the need of cosigners. Choose a lender who has a credit score requirement that you can qualify without a cosigner.

This may be difficult for undergraduate students as they do not have a significant credit history. However, graduates, parents, and professionals must consider this more seriously. It is important to remember that it is our responsibility and our duty to repay the loan that we have taken.

2 - Loan Limits

One of the main reasons borrowers opt for private student loans is because of the limited loan amount of federal loans. They are not always sufficient to pay off the entire cost of attendance. Hence, loan limits play a huge role in the selection of private student loans.

You must choose a loan that will be able to pay off the remaining of your cost of attendance and any other essential expenditures. Kindly keep a note not to borrow more than what you require.

3 - Interest Rates and Fees

Most private lenders offer the option to choose between fixed rates and variable interest rates. Fixed rates will not change throughout the lifetime of the loan. The variable rate will be calculated periodically based on the market rate.

Variable interest rates are usually lower than fixed rates at the lower range. However, they have the potential to blow up even up to 3 to 4 times the base rate when market rates fluctuate. They are suitable for loans with shorter terms where the fluctuation in variable rates have a shorter effect.

Your final interest rates for both types will be calculated based on your profile and your creditworthiness. Most private lenders offer the option to know a rough estimate of your eligible interest rates before application. You will always pay a lesser loan amount when your interest rate is lower.

4 - Loan Terms

The loan term refers to the duration given to borrowers to repay their loans. It is also called the repayment period. It is usually between 5 to 20 years. You may have the option to choose the term of your loan or your lender may set it for you depending on your credit score and other factors.

There is a good chance that shorter loan terms will result in the higher monthly payment and this may not be ideal for every borrower. However, you will be making a lesser amount of repayment over the life of the loan. It depends on many factors such as the change in interest rates, etc..

If saving money, in the long run, is your ultimate goal, loans with shorter terms are the perfect option. On the other hand, if you wish to have more manageable monthly payments, you may have to opt for longer terms for your loans.

5 - Look for Additional benefits

As borrowers, you have to look for private loan lenders who also have extra benefits and relief. Some borrowers may offer, to a limited extent, similar borrower protection benefits like the ones found in federal loans, or maybe even more. So we urge you to look into these details carefully while choosing a lender.

Some of the additional benefits that may be offered by private lenders are as follows.

  • Discount availed on auto payment

  • Option to release cosigner to avail loan when students have less credit score

  • Availing benefits in deferring the repayment on financial hardship

  • Loan Forgiveness and Discharge

  • Elimination of fees - origination, early payments, late fees, etc.

Some private lenders even offer the option to discharge the remaining of the loan amount in case of the death of the student borrower, even if a cosigner is still in the picture.


Top Private Student Loans Of 2019

The following is a list of all the top Private Loan Lenders in the market as of 2019. This list is not exhaustive but an overview of favorable private lenders.

  • Citizens Bank

  • LendKey

  • Discover 

  • Laurel Road

  • PNC

  • MPower

  • SoFi

  • Earnest

  • Sallie Mae

  • College AVE

  • CommonBond

Citizens Bank

This bank is known for its Multi-Year approval feature. This special feature can help students get loan approval for all academic years at once whereas most private lenders insist borrowers to get approval for each and every academic year.

They allow borrowers to choose between fixed and variable interest rates for the loan amount for undergraduate, graduate, postgraduate and also to parents for their child's education.

Key Features

  • Provides loans for Undergraduate, Graduate, Postgraduate, Law schools, MBA, Medical

  • No application and origination fees

  • It provides a loan term of 5 to 15 years

  • It provides flexible fixed and variable interest rates

  • Fixed interest rate range from 5.47% to 12.04%, and its variable interest rate in a range from 4.11% to 11.61%

  • Provides a discount of 0.25% point on the interest rate for choosing auto-repayment

  • Helps borrowers to avail loan amount from a range of $5,000 to $350,000

  • Provides discount for loyalty

  • Helps students to get a deferment or forbearance period

  • Can use cosigner if the borrower is not qualified for the loan

Discover Student Loans

It is one of the renowned leaders in the US for its credit card network. It is an online lender, it was a financial service provider with traditional services, but in recent years it started with providing student loans and refinancing with attractive interest rates. it is famous for not charging loan fees.

Key Features

  • It disburses student loan with both fixed and variable interest rates

  • Its variable interest rate range from 4.12% to 11.87%, and its fixed interest rate range from 5.49% to 12.99%

  • It offers loan terms from 15 to 20 years

  • A cosigner cannot be added with this lender

  • There is no application, origination or late fees

  • It provides a discount of 1% on a new student loan, to a borrower who has 3.0 GPA

  • It offers deferment or forbearance

  • BBB Rating A+

LendKey

This service provider lends loans funded by having a partnership with community credit unions, regional banks, and private lenders. The loans are then serviced by the LendKey. It does not lend loans to parents, but only to students, all the services happen online.

Key Features

  • It is a completely online service provider

  • Loans are funded and backed by community lenders

  • There no origination and prepayment fees

  • The rates start from 4.40% for fixed APR and 5.36% variable APR

  • It provides loan up to a 10-year term

  • Deferment or forbearance options are available

  • Discount available for autopay

  • BBB Rating A+

Laurel Road

It is the Student Loan and Refinancing division in KeyBank. They focus mainly on Student Loan Refinancing but also offer graduate student loans for students enrolled in eligible graduate schools.

Key Features

  • Lends Graduate, Residence and Parent loans

  • The rates range from 4.49% to 8.91% for Fixed APR and from 4.48% to 8.18% for Variable APR

  • The loan term can be chosen 5, 7, 10, 15 and 20 years

  • The loan amount starts from $5000 with no maximum amount

  • Discount on auto payment

  • No application and origination fees

  • A borrower is provided with deferment period up to 12 months during uncertain hardship

  • BBB Rating A+

MPower

MPower helps students in availing loans for students from the USA and Canada or the 105+ countries. It allows loan without referring to credit score, collateral or a cosigner. It disburses loans based on their academic performance and career plan.

Key Features

  • Provides student loan refinancing to international students

  • It offers loan with only fixed interest rate calculated based on your application profile

  • Loans with a repayment term of 10 year

  • Allots loan from $2000 to $50000

  • Students get a discount of 0.50% each on reporting the proof of graduation and employment

  • Discount on-time repayment and also on auto repayment

  • No cosigner, collateral or credit history requirement

  • BBB Rating A+

PNC

PNC has been one of the best student loan providers for more than 50 years. It offers student loans and refinances in fixed and variable interest rates.

Key Features

  • Provides loan for all professional studies like MBA, Medical, Law, Dental and all type of undergraduate and postgraduate

  • The rates start from 4.52% to 11.79% fixed APR and 2.90% to 12.11% variable APR

  • No application and origination fees

  • Discount is given on autopay

  • Deferment or Forbearance options are available

  • Loan terms can be chosen from 10 to 15 years

  • Refinancing Student Loan amount to $1000 to $75,000

  • BBB Rating A+

SoFi

SoFi is one of the leading student loan lenders and also provide refinancing options. It has refinanced student loan worth $18 million, which has refinanced for more than 250,000 borrowers.

Key Features

  • Provides loan to all graduate, postgraduate all professional studies

  • Loans are issued with an interest rate in both fixed and variable  

  • The loan term can be chosen from 5-year to 20-year

  • There are no application and origination fees

  • Discount is given on auto payment and also additional discount as SoFi Loan Discount

  • Deferment option is provided

  • BBB Rating A+

Earnest

This lender has provided service to more 50,000 members, with a total loan amount of $4.5 billion. It approves loan request where student’s debt to income ratio is up to 65 percentage.

Key Features

  • Provides loan to all graduate, postgraduate all professional studies

  • The rates start from 3.99% Variable APR and 5.09% Fixed APR

  • The loan term can be chosen from 5 to 20 years

  • A grace period of 9 months is given

  • There are no application and origination fees

  • Discount is given on auto payment and also additional discount as SoFi Loan Discount

  • The deferment payment option is provided

  • BBB Rating A+

Sallie Mae

Sallie Mae is a renowned student loan lender in the US market today. This company offers private student loans in both fixed and variable interest rates for undergraduate and postgraduate students.

Key Features

  • Sallie Mae offers multiple loan options for different fields of studies

  • Loans can be availed by a student as well as parents for education purposes

  • No application and origination fees

  • No prepayment penalties 

  • All process is made easy to apply online and it takes about 15 minutes to apply

  • The variable interest rate for loan ranges from 4.00% to 11.35%

  • The fixed interest rate for loan ranges from 5.29 to 11.89%

  • Advantage of getting cosigner release if a borrower makes 12 on-time payment

College AVE

College Avenue is a student loan lender for all undergraduate, postgraduate and professional courses. They also provide parent loan, all process happens online and it takes only a few minutes to apply and get approval. They are veterans in the market and all their services are simple and quick.

Key features

  • No application and origination fees

  • No prepayment penalties

  • All process are made online, it's easy and quick

  • The variable interest rate for loan ranges from 3.96 to 11.99%

  • The fixed interest rate for loan ranges from 4.72 to 12.94%

  • They offer 5 to 15-year terms

  • It also offers cosigner release option

CommonBond

CommonBond is known more for its social welfare activity with its student loan lending business, they take up this activity in partnership with Pencil of Promise which is a non-profit organization. This company also engage themselves in providing student loan assistance as employee benefits to most of the business as one of their programs

Key Features

  • It does not charge prepayment fees and interest are moderate

  • It charges 2% as origination fees

  • It offers student loans for all undergraduate, postgraduate and professional courses. They also provide parent loan

  • Loans with interest rate ranging from 3.66% to 9.64% Variable APR and 5.45% to 9.74% Fixed APR

  • They offer 5-year to 15-year terms


Conclusion

Among the many student loan options available, we recommend that you check for your eligibility for federal loans first before you jump on to private lenders. The following list contains the federal loans in order of priority.

  • Direct Subsidized Loans

  • Direct Unsubsidized Loans

  • Grad PLUS Loans

  • Parent PLUS Loans

  • Private Loans

The special benefits of Federal Loans are the Loan Forgiveness Programs, the Discharge Programs, Deferment and Forbearance options which are only found in some private lenders with a very limited extent.

You must seek private loans only after you have exhausted your federal loan options.

When choosing private loans, pay careful attention to the interest rates, the loan terms and all the additional benefits that they come with. A small change in the interest rate alone can make a big difference in the long run.
Detailed reviews of federal loans and individual private loans can be found in the student loan section of our website. Go through these articles to help you gather all the necessary information you need to make a decision.


FAQ's

  Which is the best Student loan to get?


There is a wide option to students to avail student loan both in Federal and Private Student Loan lenders, as borrowers should know to determine best student loan by referring to all factors that are beneficial to borrowers in all type of loans.

  Do I have to reapply student loan every year?


As students have the option to avail loans separately for every academic year, there is also an option for the students to an avail student loan from Citizens Bank, where they have multiyear approval, so loan gets disbursed every year with approving for each year.

  How many credit points do you need to avail loans?


As credit scores are very important to an avail student loan, and also it determines your interest rate to be imposed on your loan. like SoFi provides loan to a borrower who has a credit score less than 650.

  How long does it take for student loans to disburse?


It could be different or different lenders, roughly it would take 2 to a month.

  How long does it take for a loan to be approved?


It would take one week or more, a lender like SoFi takes one week to disburse the loan amount.

  Which bank has the best student loans?


Banks with attractive interest rate and other benefits would be the best option to be chosen to borrow a student loan. SoFi provides lower interest in both fixed and variable interest rate compared with other Private Student Loan.

  Can I get a student loan to study in America?


All students in America and International students can get student loans in many private student Loan providers, lenders like MPower provides Student Loan for all international students.

  Can I get a student loan as an international student?


International students can get student loans in many private student Loan providers, lenders like MPower provides Student Loan for all international students.

  Does everyone qualify for student loans?


To avail Federal student loan, a student with good academic performance will be eligible to get a loan, to avail loan with Private Student Loan, borrowers must have a good credit score.

  Which type of student loan is the best?


Availing Federal Student Loan will be the best option, for those who not qualify for this loan, the borrower can get a loan from private lenders. Student can choose the best Private Lender with low-interest rate and other benefits to borrower, as SoFi provides a borrower-friendly loan, with low-interest rate and with low cost on loans.