Best student loans

As students are provided with different options to avail financial support from Private and Federal Student loan with their own benefits. As students have an option to choose Best Student Loans

Updated by Deepu M on 22nd May 2019


In today's context, students are need of a loan to assist their educational requirement. Student prefers financial assistance for education if they haven't saved, not availed scholarship or grants. The students can avail the type of loan depending on their credit score, financial position, and other criteria prescribed by the type of lender.

Typically a student would always look to avail Federal student loan offered by the education department of the US. buy it's not for everyone, as they require criteria to be qualified, the easiest and easy availing of the student loan would be borrowing from private student loan lenders.

As they are easy to reach and avail the loans without a lot of many processes unlike a federal student loan, private lenders attract students to avail loan by not framing the criteria, but borrowers are punished with a high rate of interest, unlike Federal student loan.


Table of contents

Number Topics
1. Best Federal Student Loan
2. Other favourable factors in choosing Federal Student Loan
3. Private Student Loans
4. When to choose a Private Student Loan
5. Top Private Student Loans Of 2019
6. How private student loan is different from federal loan
7. Steps to choose best Private Student Loans
8. Conclusion

Best Federal Student Loans

It is a most demanded Student loan, because of its borrower-friendly features. It has a lower interest rate and flexible repayment terms when compared to private lenders.

There are best Federal Student Loans offered under this programme for the college students. Federal Student Loan would be a wise decision to assist the financial requirement of the college student for the first step.

Federal Direct Loan

Federal loan is a loan provided to college students and their parents with a low-interest rate, by the US Department of Education, this programme offers several other loans like Subsidised Direct Loan, Unsubsidised Direct Loan, Direct Consolidation loan, and Direct PLUS Loan, in which all type of loan provided under this programme will be insisted to repay a maximum amount in all successive years.

Other favourable factors in choosing Federal Student Loan

Interest Rates

As Federal Student loan and any other related loans offered under this programme are funded and guaranteed by the Education Department of the US, with a lower interest rate for the students, unlike private student loan lenders.

Information in this table explains the current rate of interest on various types of loan.

Type of loan

Borrower

Rate of Interest 2019

Loan Fees 2019

Direct Subsidized Loans

Undergraduate

5.05%

1.062%

Direct Unsubsidized Loans

Undergraduate

5.05%

1.062%

Direct Unsubsidized Loans

Graduate or Professional

6.60%

1.062%

Direct PLUS Loans

Parents,

Graduate or Professional

7.60%

4.248%

Repayment Plans

Federal Student Loan is borrower-friendly in repayment options, unlike Private student loan lenders. The amount of repayment monthly and the term of repayment will be fixed initially during the time of approval.

This programme allows 6 to 9 months grace period for the student to start repaying the loan, after the day of graduation. The grace period helps them to find their employment and get financially strong to repay the loan.

For the Direct Plus Loan plan, parents are encouraged to make the repayment soon after the loan gets disbursed.


Private Student Loans

The option of obtaining private loans has become common if the students have no savings or have exhausted grants and scholarships options. It has become common and the only way for fulfilling their educational requirement. This type of loan is provided by private institutions like local or national bank, online lenders, and credit union.

factors in Private Student Loans

Private Student Loan Interest rate

Private student loan charges high interest unlike Federal student loan, the most important points to be considered while opting this loan is the interest rate and fees. Interest rate is fixed for a borrower based on the past credit score and markets interest rate quoted by the Federal Reserve and Banking system. The borrower gets to choose terms in which he/she can repay the loan amount.

Cosigner requirement

Private student Loan Lender will approve the loan request if the borrower has a cosigner. Mostly, a cosigner is recommended to be a parent or other relatives, as the cosigner is made responsible for the loan, in case if any default in repayment happens. It means any default in repayment will affect credit score for both the borrower and cosigner. It’s good to be aware of this point.

The borrower must determine the cost, which should include interest rate, origination fee, early repayment fees, and other associated charges. A private Student loan can be availed only if a person qualifies by having a good credit score.


When to choose a Private Student Loan

Private Student Loan can be opted to face education expenditure whether in an undergraduate and postgraduate program. The lender provides loan to students as well as to parents, as qualifying for some of them would be difficult for a few students.

Choose your loan - Federal or Private

  • Private Student Loan lender frame their own criteria for approval of a loan, Federal Student loans are governed by rules framed by Federal Government

  • The private lender provides an option of fixed and the variable interest rate which differs from lender to lender. But in federal student loan, a borrower is provided with a fixed interest rate at the time of approval.

  • The interest rate will be fixed based on the borrower's credit score and financial position, or borrower will need a cosigner if he doesn't qualify on his own. Under Federal Student Loan all borrowers will same interest rate despite they have better credit and financial position

  • Repayment option is different for all borrowers, the Private Student Lender provides between 5 to 20 years under Federal Student Loan the repayment options are more flexible, which has various repayment options.

  • Relief is not given as forgiveness to Private Student loan Borrowers, but Federal Student Loan Borrowers get forgiveness in a various difficult situation


Top Private Student Loans Of 2019

As student requires financial assistance to pay for their education, Federal Student Loan may be affordable with a lower interest rate, but still, Federal Student Loan cant solve completely.

  • Citizens Bank

  • LendKey

  • Discover Student Loans

  • Laurel Road

  • PNC

  • MPower

  • SoFi

  • Earnest

  • Credible

  • Sallie Mae

  • College AVE

  • Commonbond

 This top Loan Lenders are recognized for its special features and character of borrower-friendly.


Citizens Bank

 This bank is known for Multiyear approval, this special feature can help the student to get Private Student Loan approval for all academic year at once, but not insisting the borrower to get approval for each and every academic year.

This Bank allows the borrower to choose any option of interest rate, fixed and variable interest for the loan amount for Undergraduate, postgraduate and also to a parent for their children education. In which approval for all academic year in one go.

Key Features

  • Provides loan for Undergraduate, Postgraduate, Law, MBA, Medical

  • No application and origination fees

  • It provides a loan term with 5 to 15 years

  • It provides a flexible fixed and variable interest rates

  • Fixed interest rate range from 6.45 to 12.05 percentage, and its variable interest rate in a range from 6.42 to 12.02 percentage.

  • As any other lender provides a discount rate of 0.25 on auto repayments

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

  • Provides discount for loyalty and autopay

  • Helps Students to get a deferment or forbearance period, by postponing the repayments

  • 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 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 13.12 percentage, and its fixed interest rate range from 5.99 to 13.99 percentage

  • The loan term is disclosed with 15 to 20 years

  • A cosigner is not available with this lender

  • The best part is no application, origination or late fees imposed by this lender

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

  • It deferment or forbearance options to borrowers

  • BBB rating A+


LendKey

This service provider lends loan funded by having a partnership with community credit unions and regional banks, loans are serviced by the LendKey. It does not lend to parent loan, but only student loan, 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

  • Its interest rate range from 4.95 to 5.36 percentage

  • This credit union funds loan for a non-profit financial institution, thus this lender provides a lower interest rate

  • It provides loan up to 10 years

  • BBB rating A+

  • Deferment or forbearance options are available

  • Discount allowed on autopay


Laurel Road

It is Student Loan and Refinancing division in KeyBank, this division in KeyBank allows to disperse Student Loan. all required process to student loan will happen online

Key Features

  • Lends Graduate, residence, Parent loan, and Student Loan Refinance

  • The interest rate in options Fixed and variable interest

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

  • The loan amount provided starting $5000 to no limit

  • 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

This lender helps students in availing loans in both the USA and Canada for International Students. It allows loan without referring to credit score and collateral. Which also not require a cosigner. It disburses loan based on their academic performance and career plan

Key Features

  • Provides student loan refinancing to international students

  • It offers loan with an only a fixed interest rate

  • Loans with a repayment term of 1 to 10 years

  • Allots loan $2000 to $50000

  • Students get discount on reporting the proof of graduation and employment

  • Discount on-time repayment and also on auto repayment

  • A cosigner is not provided
  • BBB rating A+


PNC   

It is one of the best student loan provider for more 50 years, it offers student loan and refinances in fixed and variable interest rate.

Key Features

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

  • BBB rating A+

  • A student loan for both fixed and variable interest rate

  • No application and origination fees

  • Discount is given on auto pay

  • Deferment or Forbearance options are made available

  • Loan terms can be chosen from 10 to 15 years

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


SoFi

It is one of the leading student loan lenders also refinance the student loan, which has refinanced student loan worth $18 million, which has refinanced to more than 250,000 members. It accepts a request for a student loan, a student who has a credit score of less than 650

Key Features

  • Provides loan to all graduate, postgraduate all professional studies

  • Service like refinancing and parent finance is available

  • BBB rating A+

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

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

  • 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


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

  • Service like refinancing and parent finance is available

  • Loan term options of 5 to 15 years

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

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

  • 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+


Credible

This company has a unique feature of helping Students through a credit score, it does not provide service in lending loan directly, but it saves student time and money by projecting rates offered to a student at maximum eight different lenders by just filling one application with Credible.

Key Features 

  • It is a service provider by pooling and comparing the interest rate offered by various lender for the credit score that student has.

  • This acts as a source of information for borrowers to compare rate offered by lenders.

  • Partners It has a partnership with Citizens Bank, College Ave, Discover Student Loans, EDvestinU, iHELP, INvestEd, Raise private student loans, Sallie Mae, and SunTrust.

  • This company helps to provide details of interest rate offered from 3.47 to maximum 13.99% and terms from 5 to 20 years offered by lenders for both undergraduate and graduate students.


Sallie Mae

Sallie Mae is a renowned student lender in the US market today. This company offers private student loan in both fixed and variable interest rate for undergraduate and postgraduate students. this company also have one of the unique product that no competitors have if a parent want to send their children to private school by using K-12.

Key Features

  • Sallie Mae offers student loans at any variation that exists in the market, as they are quite large

  • 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 4.37 to 11.23%

  • The fixed interest rate for loan ranges from 5.74 to 11.85%

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


College AVE

College AVE is a full-fledged student loan lender for all undergraduate, postgraduate and professional course. They also provide parent loan, all process happens online and it takes only a few minutes to apply and get approval. They are veteran in doing these services, all their service 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 3.94 to 11.19%

  • The fixed interest rate for loan ranges from 5.29 to 12.78%

  • They provide loan terms for 5 to 15 years

  • It also offers cosigner release option

  • Most considering the part they do not provide uniform forbearance period


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 organisation. 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 course. They also provide parent loan

  • Loans with interest rate ranging from 3.95 to 9.81%

  • With 5 to 15 years payback period


How private student loan is different from federal loan

Standardised type of loans are offered under Federal loan, an option of terms and the interest rate would differ in private student loan as it mainly depends on the laws related to a private loan, a credit score of the borrower or cosigner and mainly on the type of loan

Loan types

Availing the type of loan would mainly get influenced by the type of degree pursued by the borrower. All the factors like loan amount, interest rate, and the monthly payment will be decided on the basis of the type of the loan

  • Community college. borrowers pursuing a two-year degree in non-traditional school will avail this type of loan

  • Undergraduate loan. This loan can be borrowed by the student who is in undergraduate to face his educational expense. In this loan interest rate will be low, but there will be a limit in the loan amount

  • Graduate/professional school loan. This loan is availed by the borrower who is in postgraduate or who are pursuing professional course like medical, dental and MBA. there is no limit to the loan amount, as it mainly depends on the course fees.there are extra programs offered by some lenders to borrowers who are pursuing a professional course

  • Parent Loans. This loan is borrowed by parents for the purpose of children education, where the loan will be borrowed by the parent under Parent Loan, but it will be repaid by the child. Where a parent is also legally responsible to repay.

Maximizing Federal Financial Aid

Borrowers before deciding to get financial assistance from a private lender, he/she should completely make use federal aid, free financial aid and also private scholarships. This could help to get debt free.

Students can submit a free application for federal student aid this can help to finance students education before applying to private lenders. Even if a student is unsure to avail financial aid for education or uncertain to get qualify for Federal aid, still it's worth  submitting a FAFSA

FAFSA

Applying FAFSA could help to avail other financial aid, it is recommended for Assistance Program like Federal Student loans, work-study programs and, grants. There are no criteria to be fulfilled like income or grade requirement to avail some of the federal aid.

It is applied to avail federal aid, applying for FAFSA can help to avail other forms of financial aid. FAFSA information is referred by many states and colleges to determine the student is for state and school aid.


How to choose a private student loan

Loan terms

Loan term generally means of the repayment period, repayment period would be fixed differently by different lenders. as a period range from 5 to 20 years. There is an option for the borrowers to choose shorter or longer repayment, choosing shorter repayment would obviously increase your monthly repayment, lower the interest rate and ultimately save on your total cost.

Size of the loan amount to apply

If loan size is small

All private Student Loan provider has their lowest loan that borrower can borrow, it could be less than $1000, but borrowing loan in less amount, would not the best option to choose a private lender.

If loan size is maximum

Private Student Loan provider would have several limitations, that restricts the amount to be borrowed. There could any maximum amount that you can borrow from the lender or there would be a limitation to get qualify to avail maximum student loan. You can avail the maximum loan when you want to pay for the undergraduate and graduate level.

The interest rate for a Private Student Loan

Private student loan lenders offer student loan with two different types of interest rate, in which borrower should decide on their interest rate before the loan gets approved. It's not possible to switch the interest rate type after the loan gets approved, thus borrowers should be aware of the fixed and variable interest rate.

  • Fixed interest rate loan

If a borrower decides to take a loan with fixed interest, this interest rate will never change for the whole life of the loan. framing fixed interest rate would mainly depend on the lender's decision, market rates and also borrowers credit score.

If the borrower wants to have a long term loan for the expenses, it is better to choose a fixed interest rate, as the borrower will be in a position to repay their loan amount in a long period and the interest rate also would not increase in future.

  • Variable interest rate loan

Similar to the fixed interest, the variable interest rate would be determined by market rate and borrowers credit score. In choosing a variable interest for a long term loan, this would be a chance to get an interest rate higher or lower in the future.


Steps to choose best Private Student Loans

Private Student Loan does not offer good benefits compared to Federal Student Loan but choosing one best in the whole bunch of Private Student Loan by comparing the following factors.

1. Product Offering

Different Private Student Loan lenders offer different benefits, as they create their own difference by providing to the borrowers, borrowers should be keen in finding the terms offered by the lender, the interest rate at which loan is offered. Lenders various benefits provided to borrowers like deferment options.

2. Eligibility

There are some eligibility criteria that borrower have to meet them to avail a loan, like credit score, borrowers would likely get disqualify to avail loan when they have less credit loan, so being a student who wants to avail loan have to see a set of lenders who offers loan to student who has less credit score

3. Cost

Students being borrower have to determine the cost that would incur on loan, compare set of private loan lenders who offer loan with less interest rate and other related costs like application, origination fees

It's wise to choose a private lender who offers loan with a low-interest rate, with no application, origination fees.low-interest

4. Look for Additional benefits

 Borrowers have to look for the private loan lenders who also have extra benefits and relief given to borrowers, as follows

  • Discount availed on auto payment

  • Options to repay early to save costs related to loan

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

  • Availing benefits in deferring the repayment on financial hardship


Conclusion

As students are provided with different options to avail financial support from Private and Federal Student loan, as there have their own benefits and disadvantage in both lenders, as borrowers, we have a chance to evaluate and find the difference between them and finally choosing the best option by evaluating various beneficial factors as discussed above. There are federal loans which are not for all students, as borrowers have to get qualify for that. a private loan can be availed by qualifying with a good credit score. irrespective of the type of loans can be refinanced.


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.