The best student loans are a great way to finance your learning, and get all the qualifications that you need to succeed in your future work. By their very nature, using student loans means that you’ll pay more for your education than if you had the funds to pay for your schooling upfront. However, the best student loans can help keep these costs under control, which is an absolute necessity when the price of higher education has the potential to run into hundreds of thousands of dollars. Usually your current financial situation, and how it could evolve going forward, will play a big part in determining the best student loan for you. That said, certain student loans bestow greater advantages on borrowers than others, particularly with regard to the safeguards and flexibility afforded to those who experience financial problems in repaying their student loans.
And if you're an American citizen, or an eligible non-citizen who meets the necessary federal government criteria, it’s usually best to explore all the federal student loan options first, before looking to the best private student loan providers if you’re still falling short financially. When it comes to federal assistance, using FAFSA - Free Application for Federal Student Aid - is often the best first step to take. The significant benefits and protections that FAFSA affords students and their co-signers are the main reasons for this recommendation, while a credit check isn’t usually needed to approve such loans. Given the potential for certain federal loans to be subsidized by the government while you're in school, and for them to even be forgiven in certain situations, there are few arguments against seeking Federal Student Aid before looking to the best student loans from private lenders.
Of course, should you be rejected for a federal student loan, private student loan companies are the natural fall back option. However, the key is to find the student loans that will provide the lowest rates and the best overall terms for you. On top of this, you’ll likely have other priorities and requirements that you're concerned about and that’s where our shortlist of the best student loans companies aims to help. So in our rundown, we highlight the top rated student loan provider if you want to pay your loan back quickly, and another loan company that stands out for cosigners with a good credit rating. A top choice for established borrowers and also a student loans company that tends to deliver when the student delivers good grades too are there as well, among others.
For an even better idea of the terms that student loan providers will likely offer you, using a comparison site such as Credible is a great option to use too. By comparing the loan rates that you could be offered from a number of student loan companies at the same time, you’ll save time in your search, and almost certainly a lot of money going forward as well.
1. Sallie Mae: Best overall
Out of all the private lenders we reviewed, we think that Sallie Mae is the best - and most popular - student loan. Sallie Mae's terms, rates, and borrower eligibility appeal to a broader range of students, from DACA students who need to cover the full cost of attending school to those looking for a relatively small financial aid award. Sallie Mae, like all private lenders, relies on credit reports to determine interest rates for their borrowers, which makes it a less appealing option than Federal Student Aid - however, it offers tremendous flexibility in terms of loan terms and amounts. Sallie Mae also has relatively clear-cut forbearance and hardship options compared to other lenders who may not want to encourage borrowers to defer payments. The information put forth by Sallie Mae can make students feel more comfortable opting for a lender with set policies that protect the borrower, and not just a lender.
2. Citizens Bank: Best for cosigners with excellent credit
Of all the private student loans, Citizens Bank has some of the lowest interest rates we've seen. As a large bank, Citizens Bank has the luxury of making applying for a student loan somewhat less of a hassle for students their cosigners: prospective borrowers can opt for a multi-year borrowing option, may benefit from a generous 12 months of forbearance, and only undergo a soft credit check at the time of application. Citizens Bank is one of the best student loans especially because international students are welcome to apply, provided that they have a credit-worthy applicant.
We also only recommend Citizens Bank to students who have an established relationship with their cosigner who will be willing to step in and offer payment in the event that the student cannot and that forbearance is denied. Cosigners are attached to the loan for 36 consecutive months of on-time payments, a period that's twice as long than what's offered by most other private lenders. But because of Citizens Bank's generous policies, we don't see this as a major con - the policy merely excludes a cohort of students who may not have a cosigner they trust.
3. College Ave: Best for borrowers who want to pay off their loan quickly
College Ave is one of the best student loans because it's one of the most flexible options a student can opt for, as evidenced by possibility of choosing your own loan term instead of having one assigned based on the amount you borrow. We see College Ave as somewhat similar to Sallie Mae - even their rates are comparable. Very often, prospective borrowers who are looking into Sallie Mae as a lender are also looking at College Ave as a possibility. However, College Ave doesn't have a formal forbearance policy and doesn't actively put forth any information about forbearance options.
Ultimately, students who want to and are capable of paying off their student loan rather aggressively are the best candidates for a College Ave student loan. Even students with worthy cosigners who anticipate getting some help paying off their loan should explore College Ave as an option - you may end up getting quoted a lower rate than any other lender, depending on your and your cosigner's credit.
4. Ascent: Best multi-option student loan
Ascent is one of the best student loans for students who want the most options, especially if prospective borrowers feel unsure about the state of their credit or finances. Ascent stands out by offering two types of student loans for all degrees: student loans offered with or without a cosigner with repayment plans assigned to each. The reality is that not all college students have the luxury of having a solid enough relationship to a more credit-worthy individual to ask someone to be their student loan cosigner. Many students may have family members who could service as cosigners, but their credit may not be good enough to satisfy most lenders. While most private lenders tend to exclude groups of potential borrowers with their criteria and restrictions, Ascent takes a more inclusive approach to student loans. These two types of Ascent loans have different criteria to help students make the best choice best on their current and anticipated financial situation.
5. CommonBond: Best student loan for more established borrowers
CommonBond student loans are some of the most competitive in the market thanks to its generous policies in the areas of repayment and forbearance. Its Social Promise - the company's pledge to help provide schools, teachers, and technology to students in the developing world - can attract more socially-conscious students who are looking to make a difference by supporting companies working to better the world in one way or another.
Despite its good standing among other student loan providers, CommonBond has some major flaws that may automatically rule it out for some students who are either struggling or who are wary of experiencing financial hardship in the future. Younger students who have relatively little financial literacy or who are still learning financial responsibility may not feel comfortable opting for a lender that doesn't offer the maximum amount of protections. We suggest that only more financially secure and established borrowers with excellent credit opt for CommonBond, which for them would still be one of the best student loans.
6. Discover: A loan for good students
Discover student loans certainly do not tailor to the needs of all students, but those who feel like they will be well-serviced by Discover may find that the benefits outweigh the lender's flaws - especially if they are excellent students. While we determined that the lack of variation in loan terms can be extremely inconvenient for some students, particularly those who are only borrowing the minimum amount, those who aren't bothered by Discover's policies can have just as pleasant an experience with the bank as they would with other top lenders. Students who meet GPA requirements can get a one-time cash back reward for their academic performance, making Discover student loans one of a kind.
6. SoFi student loans: Best loan for students who value post-grad resources
SoFi - officially called Social Finance - may not be our top pick among the best student loans, but it still has plenty to offer. Like many lenders, SoFi caters to a specific cohort of students. In this case, we've determined that the best candidates for a SoFi student loan are students who have stable relationships with their cosigners who agree to stay on for the entire life of the loan. These cosigners should have excellent credit to qualify for a lower rate. As for the student, he or she must value post-grad resources above most things in order to opt for SoFi as a lender. This is where the lender shines: it has some of the best perks we've seen, such as career coaching and networking events to help the borrower find gainful employment that will eventually help them repay the loan.
How to find the best student loan for you
Even the best student loans may not be the best options for you. Here's how to evaluate a lender before committing to a loan, and what criteria you should keep in mind when sifting through a lot of sometimes confusing information.
Your credit and finances and relationships will determine whether or not you take out a loan with a cosigner. If you have a parent or other family member who is willing to be your cosigner, and if that person has good credit, you'll want to look into the lowest interest rate ranges you can find.
Of course, rates should be competitive in order to grab your attention. Depending on your credit or your co-signer's credit, you'll be looking at a certain portion of the interest rate spectrum, whether you want variable or fixed rates. If you have good credit, it may not be in your best interest to opt for a lender whose lowest rates are still relatively high - you can do better elsewhere.
Depending on where you see yourself after graduation, you may want to opt for lenders who offer more generous forbearance options than others. For example, if you are not looking to or expecting to work 6 months after graduation, you'll want to find a lender with the option to extend your grace period. If you intend on entering an industry with a lot of job volatility, a lender with a formal policy is a better bet.
Financial burden and future
Also consider your ability to repay your loan both with or without help from your cosigner. There are many handy calculators online that can determine how much you would hypothetically pay every month depending on the loan term, loan amount, and rate type and amount. Find an amount that you feel comfortable with and remember that if your circumstances change, you can usually pay more on your loan without penalty.
What should I look for in a student loan?
Choosing a student loan is a very personal process that heavily depends on your financial literacy and comfort. While the nitty gritty like interest rates and repayment plan flexibility matter, ultimately, you want to feel comfortable with your choice of provider based on different criteria. Regardless of your income, cosigner situation, or loan amount, you want to look for the following in a student loan provider.
Good customer service
Like any kind of financial service, loan servicing is not an exact science, which is why many providers choose not to have formal policies. Look for a student loan provider that has proven excellence in customer service: representatives who are helpful, communicative, and responsive. In the event of any questions or issues with your application or loan, you want to talk to someone who is knowledgeable and perhaps most importantly, reachable.
Clear policies and information
Even the best student loans, by definition, are designed to get more of your money. Many providers do this by omitting important information that young and inexperienced borrowers wouldn't necessarily think about. Many providers, including some of the best student loans, have tables comparing their loans with other providers' to "prove" how they're better - but the information you see is selected specifically to make that provider look more desirable. To evaluate the best student loans, we took this into consideration, and we found that generally, the more information that's omitted, the worse the student loan. Think
No student loan is perfect, and it's the ones that admit that they're not that are the best. Transparency communicates that you, as the borrower, can trust this lender to help you make the best decision, even if it means that you opt for a different lender.
We found that the best student loans encourage prospective borrowers to do their research and evaluate different providers before committing to one. The best student loans also encourage eligible students to opt for Federal Student Aid by submitting the FAFSA because the government can provide benefits and protections no private lender can offer.
Should you take out a student loan?
If you're looking into the best student loans, chances are you want or need help paying for your education. There's absolutely no shame in that: in fact, about 43 million Americans - about one-sixth of the population - are currently paying for their federal student loan. That's $1.5 trillion that's being paid back to the government. There's an addition $119 billion in student loans that's being paid back to private lenders. If you're nervous about taking out a loan and being in debt for many years to come, you're not alone, but it helps to know that taking out a student loan, like taking out a mortgage, doesn't have to negatively impact your finances.
Taking out a student loan isn't an easy decision to make. Here's how you know it's the right move for you.
- You need money to pay for school and related expenses like textbooks and housing
- You want to have the "complete" experience your college can offer, such as living in a dorm.
- You've exhausted all other options (scholarships, grants, family aid) and need to supplement those funds with extra money, or are unsure about the financial future of your main sources (family, employment, etc).
- Are in a financial situation that allows for new debt and additional monthly payments.
Student loans aren't necessarily 'bad'
As is turns out, there is such thing as "good debt," and student loans fall into that category. Here's why taking out a student loans can actually benefit you in the long run, other than helping you pay for your education.
- Paying off your student loan in a timely way can help you build your credit history without the necessity of a credit card.
- Having student loan debt can teach fiscal responsibility early.
- Depending on your line of work, your debt may be forgiven, meaning that you may be eligible to get your education for reduced tuition.
- Generally, providers don't penalize borrowers for paying ahead of time - so if you want to avoid paying extra on interest, you can pay more than what is due if your budget allows for it: this gives you the financial freedom you need when in school as well as the ability to pay less on interest than expected, reducing the overall cost of your education.
Mistakes to avoid when taking out a student loan
Needless to say, the process of taking out a student loan is a landmine for borrower mistakes, starting with choosing the wrong lender. Here's a list of mistakes to avoid in order to avoid paying more for your education.
- Not taking advantage of scholarships, grants, and federal aid before turning to private lenders
- Not reading the fine print: Often, information about forbearance and deferment are hidden in the fine print
- Taking on too much debt: debt beyond what you can repay can take a heavy toll on your finances in the long run
- Not creating budgets for both while you're in school and post-graduation
- Not comparing lenders or submitting several applications to see where you can get the best rate
Credible: A great student loan comparison site
If you pursue any of the student loan companies we've reviewed here on Top Ten Reviews, you'll be redirected to Credible. Don't worry; Credible is a very useful tool for comparing student loan rates.
The website allows you to compare student loan rates from up to eight lenders for free. Credible gets paid only if you sign up for a loan through the company's website. It doesn't affect your rate, and you won't be charged any extraneous fees. You can also use Credible to compare student loan refinancing rates.
The website asks you to fill out a form with some of your personal information for you to get the most accurate rates, but it's fast and easy to do. You'll need to know which school you're attending, the degree type, your expected graduation date and the academic period for the loan you want.
If you’re unsure how much money you should ask for, check out the website's helpful tips. You should not request more than the cost of attendance, and you should take into account any other financial assistance you're getting, such as scholarships and grants. Then, you can choose from multiple repayment types without any prepayment penalties. The website also has a separate section for co-signers; having a co-signer can help you get a lower rate.
Credible takes a lot of the hard work out of shopping around for the best student loans. We recommend it to anyone researching rates for college.
Knowing how much loan debt students in your area have can be helpful as you plan for your financial future. The Institute for College Access and Success looked at public four-year colleges across the United States and found members of the class of 2016 graduated with more than $30,000 in debt in 17 states. Utah graduates had the lowest average debt amount at $19,975, while New Mexico, California, Arizona and Nevada also had lower student loan debt averages. Students in New Hampshire had the most student loan debt, averaging $36,367.
Most public colleges and universities have breakdowns of the required tuition and fees online you can use to figure out how much your education will cost. This resource is usually available in the admissions portions of the website. While this won’t include any interest you’ll pay on a loan, it does give you a better idea of the tab you’ll need to pay.
When to start looking for a student loan
If you’re wondering when you should start looking at what student loan options are best for you, the answer is now. It’s almost never too early to start considering your options and figuring out how you’ll pay for your education. You should also start looking for money through grants and scholarships. Check out sites like fastweb.com and studentscholarshipsearch.com to help you in your search. It's important not to wait until your senior year of high school to start looking around because deadlines for many programs fall earlier in the year than that. Instead, start looking at loan providers and scholarships early in your high school career.
Some steps early high school students can take to prepare for attending college include:
- Get good grades.
- Ask your guidance counselor for help.
- Take AP classes.
- Start ACT or SAT preparation.
- Use summers to build up volunteer hours or internship skills.
- Begin preliminary college research. It's OK to change your mind, but it’s important to start considering your options.
How long does it take to pay off student loans?
If you’re about to graduate from college but find yourself in debt, you’re not alone. More than 44.7 million people owed money on student loans at the end of 2017 according to the Chronicle of Higher Education. You and millions of other people will be paying student loans off for years, but how long is that actually going to take?
Sadly, there is no one answer to this question. It depends on how much you owe and the payment program you set up with the federal or private loan provider. If you'd like to pay them off faster, the Consumer Financial Protection Bureau recommends contacting the company you got your loan through and asking how you can do so. You can also use an online student loan debt calculator to see how much sooner you’ll pay off your debt if you increase your monthly payment.
Private student loans generally take about 10 years to pay off, though depending on the terms and conditions, it can take up to 25 years. Most private companies offer graduated repayment where the monthly payment you make starts out small and gets bigger over the years as you presumably make more money. You'll also most likely have the option of an extended repayment plan where you pay less each month but have to pay over a longer period of time.
If you have a federal student loan, standard repayment usually takes about 10 years. Graduated repayment can take anywhere from 10 to 30 years, and extended payment for borrowers with less than $30,000 in debt can take up to 25 years. There is also an income-driven repayment plan option, which might qualify you for some loan forgiveness, but this is something you need to work out directly with your federal loan provider. Private loans, including those from the companies we reviewed, don't offer this option.
Why are cosigners important for student loans?
Most young folks fresh out of high school have very little credit history, so they'll need someone to co-sign on the paperwork for their loans. The cosigner is equally responsible for making sure the loan and interest are paid off. Even if you do qualify for a loan and don’t necessarily need a co-signer, having one can sometimes mean you’ll get a lower interest rate.
Some private loan companies let co-signers off the hook after a certain period of time, but before you get that far, who should you ask to co-sign in the first place? First and foremost, ask your parents. They’re most likely going to be trustworthy and want to support you in your educational endeavors. If this isn’t an option for you, a co-signer can really be anyone who meets the private loan company’s requirements. These vary, but the co-signer doesn’t need to be related to you in order to volunteer.
Asking another relative like an aunt or uncle or even a good friend is a great option if your parents are unable or have particularly bad credit history themselves. One thing to keep in mind is that if you, the student, default on the loan or miss payments, it will damage both your credit history and the history of the person who co-signed on the loan. It’s a big responsibility.
Avoiding student loan scams
Fraudulent student loan forgiveness programs are advertised on the internet as well as through telemarketing phone calls. Many of these programs advertise in a very aggressive way, and you should avoid them. The U.S. Department of Education says fraudulent companies make claims such as "Your student loan is flagged for forgiveness pending verification. Call now!” or “Act immediately to qualify for student loan forgiveness before the program is discontinued.” These claims are never true. Also, some student loan debt relief companies claim to reduce your monthly payment but could then change your payment plan in a way that negatively impacts you in the long run. Further some companies claim they are affiliated with the DOE when they aren't. A list of trusted companies that provide student loan services is posted by the DOE on its website.
Another scam to avoid is the advanced fee scam. A private loan company may tell you it can get you the best interest rate and loan terms but will ask for a fee first, which is a percentage of your loan amount or a flat rate. You should never pay a fee to get a loan, so don’t work with companies that offer this option.
If you think you were scammed, contact your private loan company and ask about your options. If you have a federal student loan, change your FSA ID, contact the loan service and file a complaint with the Federal Trade Commission.
Student loan forgiveness programs
If you took out federal loans as well as private ones, the Teacher Forgiveness Program is one way to get help paying them off. The program pays off thousands of dollars of your federal Stafford loans or all of your Perkins loans if you teach at certain low-income elementary or secondary schools for five consecutive years. The full list of schools is available through StudentLoans.gov and includes locations in Idaho, New Jersey, South Carolina and a multitude of other states. Take note though, this program doesn’t apply to private loans. There are also student loan forgiveness programs available to those who enlist in the military or a public service job, but those also only apply to federal loans. In general, if a company tells you your private loans can be forgiven, it's most likely a scam.
Student loan refinance
While you can’t get your private loans totally wiped from your record, you can refinance. This means working with your loan provider to reduce the amount of money you pay each month. This can be useful in the short term if a large expense arises, but you should always try to pay off as much of your loan as possible as quickly as possible. There are a multitude of companies that offer student loan refinancing programs, but we recommend working with the loan provider you already have to avoid any extraneous fees or fine print. If you choose to refinance, always get all the information you need in writing before agreeing to the changes.
Getting help with student loan payments
If you find yourself in a situation you can't resolve with a private loan provider, the Consumer Financial Protection Bureau can help. The CFPB Ombudsman's Office is an "independent, impartial and confidential" resource you can turn to, according to its website. And you aren't alone in needing this help: 1,190 of the 1,385 inquiries the office received in fiscal year 2018 were from individuals, according to the office’s annual report. While most inquiries were related to mortgages, 26 percent had to do with student loans. If this is an avenue you'd like to pursue, contact the ombudsman's office by email at CFPBOmbudsman@cfpb.gov or by calling 855-830-7880 or 202-435-7880.
FAQs on student loans
What is an MPN?
An MPN, or master promissory note, is the document you sign agreeing to pay back the loan.
What is no deferment?
You have to start paying the loan back right away, even while you're in school.
So what is full deferment?
You can wait until you finish school before having to pay back your student loan.
What if I can't repay my loans?
If you find yourself in a tight spot and simply can't repay your loans, you can apply for deferment, which allows you to take longer to pay back the loan. You can also apply for forbearance to have your entire loan suspended, but only if you can prove extreme financial hardship or other unusual circumstances.
What if I don't go back to school next fall?
Talk to your school's financial aid office. You will still have to repay your student loans, whether they’re federal or private, but your financial aid office will be able to provide you with more information about your specific options.
Can just anybody take out a student loan?
You're eligible to take out a student loan if you're enrolled in a degree, certificate or approved program at an eligible school as a U.S. citizen or eligible non-citizen. There are always exceptions, so if you're unsure, just ask. Most lenders require you have a high school diploma or equivalency in order to get a loan, too.
How do I find the balance of my private student loan?
Contact the company directly, or check your credit report.