Why Apply for Student Loans Online?
The top lenders in our review are SoFi, the Gold Award winner; Citizens Bank, the Silver Award winner; and Wells Fargo, the Bronze Award winner. Here’s more on choosing a lender to meet your needs, along with detail on how we arrived at our rankings.
Private student loans are meant to supplement federal loans and help pay for living expenses, tuition and books. These loans bridge the gap between what you receive from the government and what you actually need to go to school. But private student loans are best used when you’ve exhausted other forms of financial aid, such as grants, scholarships and work-study options
The best private student loans offer low APRs and fair repayment terms as well as tools to help students calculate their payments. Some offer career counseling and unemployment protection. Many of the student loan companies we reviewed also offer student loan consolidation. If you’ve already graduated and have many student loans, you may be interested in student loan refinancing. You can also find useful information in our articles about student loans.
How to Pay for College
College costs continue to rise, and they extend beyond tuition to include paying for textbooks; other supplies, such as laptops or tablets; room and board; and other living expenses. There are many types of financial aid available for students.
Scholarships & Grants
These aren’t loans, so there’s no interest and you won’t have to pay them back. Grants are need based, and scholarships are usually merit based. In order to be considered for grants and other forms of financial aid, you need to fill out the FAFSA, which determines if you meet the need-based criteria to receive such funding. Scholarships are awarded by a variety of organizations, including the institutions themselves as well as nonprofits, corporations, labor unions and religious organizations.
Federal Student Loans
These are the most common type of student loans and are provided by the federal government in either subsidized or unsubsidized forms. With a subsidized loan, the interest is paid by government as long as you are attending school at least part-time. Payments on federal student loans are usually deferred until a student stops attending school full time. Federal student loans usually have fixed interest rates and don’t require credit checks when you apply. The application for these loans is the same as for grants, the FAFSA.
Private Student Loans
These are sometimes called alternative student loan and are provided by a variety of sources, including banks, credit unions, and peer-to-peer lenders. The application process for these loans is considerably different than federal loans. Credit scores, employment history and income are all factors that are considered, and you may need a co-signer to be approved for one of these loans.
In general, a private student loan can have higher APRs than federal student loans. Private student loans are unsubsidized, so interest accrues while the student attends school. While other types of college financing are capped at the cost of admission, you can borrow larger amounts from private lenders. Private student loans typically do not have deferred payments, and you may be required to make small payments on them while you are in school.
Parent loans are a relatively new type of student loan. These are made to the parents and not the students, and it is the parents who are responsible for repayment. These loans are unsubsidized and repayment usually begins shortly after the funds are dispersed. Parent loans are available through the federal government as well as through private organizations, such as Citizens Bank.
Consolidating & Refinancing Your Loans
Many private student loan companies also offer loan consolidation, which they sometimes confusingly call loan refinancing. With student loan consolidation your federal and private student loans are paid off by the lender and combined into a single loan with different rates and terms. With refinancing you renegotiate with the lender to get a longer term or different rates.
Consolidation usually encompasses refinancing, since your loan will have a new term and new rates.
Consolidation can be a good option if you have a solid job that may afford you the opportunity to accept larger payments, if you have multiple student loans and want the convenience of having one payment or if you want to release a co-signer. There are some downsides to consolidation. You can lose any perks from your current lender and may end up paying more total in interest throughout the life of the loan. SoFi, Citizens Bank, Wells Fargo and iHelp all offer student loan consolidation options.
Student Loans: What We Evaluated & What We Found
To assess these private student loan companies, we considered the types of loans offered, terms, repayment options, and quality of help and support. The categories were combined into the proprietary scores listed above that reflect the strength of a particular lender’s offerings. It’s important to know that while a lender with a 100 percent score on its loan terms may advertise good rates, but the rates you receive can depend on a variety of factors such as your personal credit score.
Loans are available for both undergraduate and graduate studies. These loans can have different limits, though many of the private student loan companies in our review only cover the cost of attendance, which can vary depending on the institutions you choose to attend. Several of the lenders also offer debt consolidation as an options.
When reviewing lenders, we looked at the high and low ranges for both fixed- and variable-rate student loans. The rates a lender lists on its website may not be the same as the rates you receive because they are based on a variety of factors. Many lenders also have calculators on their websites to help you estimate your payments.
The loan repayment score represents a variety of factors, including the loan’s repayment terms as well as any rate reductions offered for setting up automatic payments. Many of the private student loans we reviewed also offer a grace period during which you won’t be required to make payments.
Several of the lenders also have rate-reduction offers for having good grades or meeting other criteria. When applying, you may want to inquire about any of these offers. Unemployment protections can help you if you lose your job – a lender who offers this won’t require payments on your loan for up to a year if you find yourself unemployed.
Help & Support
Our reviewers also looked at the options available for contacting the lender if you have problems. Phone, email and live chat were considered, since multiple options can help you resolve any problems quickly. We also looked to see if the lender offered any kind of career support or coaching.
Our Verdict & Recommendations
While SoFi, Citizens Bank and Wells Fargo received high rankings because they scored well in repayment and loan limit scores, they also offer quality features, such as unemployment protections and career support.
Sallie Mae, one of the most popular names in the college student loan industry, also scored very well in terms of loan limits and repayment options. Additionally, SunTrust and PCN stand out for offering rate reductions when signing up for automatic payments.
When taking on any type of debt, it is important to get all of the information, understand the terms of your loan and meticulously study the terms of service associated with your loan. Look for companies that offer the best rates based on your credit worthiness and that support your choice for a repayment plan.