Best Student Loans of 2018

Cheryl Lock ·
Updated
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We spent more than 10 hours doing research to narrow down student loan providers and find the best of the best. We waded through private student loan options, scoured the websites, and spoke to experts. After comparing all our data, we selected College Ave as the best student loan option for most people. It has some of the best rates we saw and offers more term options than many other lenders.

Best Overall
College Ave
College Ave is our choice for best student loan provider because it has flexible terms, many repayment options and good rates.
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Best Rates
SunTrust
After comparing rates, we found that SunTrust often has lower rates, and if you meet certain requirements you can get discounts on your rate.
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Best Terms
Citizen’s Bank
Citizen’s Bank has many different options for term length. Loans range from 5 to 15 years. Multi-year approval is also available.
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Best Overall
We liked the flexibility offered in terms of payback for College Ave loans the most. You can pick from 8-, 10-, 12-, or 15-year terms and make full (principal and interest) payments while you’re in school.
You could choose instead to make interest-only payments a flat payment (with a $25 minimum) while in school or defer payments until after you graduate. We also love how transparent the website is, explaining exactly how the repayment terms work. For example, it explains that you can skip making payments at all while you’re in school but that you’ll pay more in interest over the life of your loan this way. Plus, you can see your balance, pay your bill and more with 24/7 online self-service. We also liked that up to 100% of approved school-certified costs are covered, with the caveat that this could lead to over-borrowing if students aren’t careful.
Pros
  • Four different term options
  • Maximum loan amount is 100% of school costs
  • Good rates
Cons
  • Doesn’t offer as many discounts as other lenders
  • Co-signer release period is 24 months
  • Max loan amount can lead to overborrowing
Credible
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Best Rates
We like the flexibility of loan terms with SunTrust, and the fact that you can make deferments up to six months after graduation or leaving school.
Or you can pick from three options while you’re in school, including full payments, interest only, or $25 a month. SunTrust also offers a 0.50% APR discount with autopay made from SunTrust accounts, or 0.25% APR discounts with autopay made from other accounts. If you graduate and earn a degree, you are also eligible for up to 2% principal reduction, based on the type of loan and your net disbursed loan amount.
Pros
  • Low rates
  • Rate discounts for autopay through SunTrust accounts
  • Up to 2 % principal reduction for graduating
Cons
  • The loan maximum might not cover all your education expenses
  • The co-signer release period is on the higher end of what we’ve seen
  • Loan can’t be consolidated with other student loans.
Credible
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Best Terms
We like the flexibility of loan terms with Citizens Bank, with 5, 10 or 15-year loan terms.
You can also make full or interest-only payments while you’re in school or wait until after graduation to start paying. Citizens Bank also offers a 0.25% discount on your APR if you have another Citizens Bank account, and an additional 0.25% discount on your APR with automatic payments. Multi-year approval is available for students applying for 5, 10 or 15-year student loans, as well.
Pros
  • Terms range from 5 to 15 years
  • Multi-year approval
  • Physical branches for in-person applications
Cons
  • Co-signer release is 36 months
  • $100,000 limit may not cover all expenses
  • Only two months forbearance for losing a job
Credible
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Best for Cosigners
Ascent offers flexible loan terms and repayment schedules, including in-school interest-only repayment, deferred repayment up to six months after leaving school, or $25 minimum payments per month while in school.
You can also release your co-signer after 24 consecutive, on-time payments. In terms of perks, Ascent offers a 1% cash back graduation reward and 0.25% interest rate reductions for payments made via automatic debit.
Pros
  • 1% cash back graduation reward
Cons
  • High minimum loan amount
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Best for Discounts and Extras
Commerce Bank offers in-school deferment, or you can opt to pay $25 a month while in school for an interest rate that is 0.5% lower than the deferred repayment option – 0.25% lower for graduate students and 1% lower for undergraduate students.
Borrowers can also receive up to 120 free minutes of live online help from Chegg Tutors or free access to Chegg Study with guided Textbook Solutions.
Pros
  • Includes access to Chegg tutors and other tools for students
Cons
  • Terms aren’t as flexible as other lenders
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We like Sallie Mae’s flexible repayment terms, including in-school deferment and up to six months deferment after you graduate or leave school.
You can also make interest-only payments for up to 12 months or pay $25 month toward your loan while in school. Your co-signer can be released after 12 consecutive on-time full payments, and that’s is one of the lowest time frames we’ve seen. Borrowers also get 120 free minutes of tutoring through Chegg Tutors or four months of free access to Chegg Study. There’s also a 0.25% autopay discount, which is fairly standard with private lenders these days. And private lenders often offer additional discounted incentives as well. Sallie Mae also has a more limited range of terms than other lenders.
Pros
  • Flexible repayment options
Cons
  • Not as many discounts as other lenders
Credible
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Repayment terms include in-school deferment and deferment for up to six months after graduation or leaving school.
Discover borrowers are also eligible for cash rewards for good grades. The given 15-year loan term is more restrictive than other options, and there is no opportunity to release a co-signer.
Pros
  • Has very good rates
Cons
  • Only one term option
Credible
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LendKey connects borrowers with community banks and credit unions, meaning the service is likely to be more personalized than it might be with bigger banks or providers.
Repayment options allow you to start making interest-only or $25 a month payments as soon as you take out the loan, or you can make full payments six months after graduating or leaving school. Co-signers can leave the agreement after 24 on-time monthly payments have been made.
Pros
  • Has more personalized service
Cons
  • Terms and loan amounts are more restrictive than other lenders
Credible
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Repayment options include in-school deferment and up to six months after graduation or leaving school.
Co-signers can be released after 24 on-time payments if your first payment is on time. Additional perks include discounts based on current Wells Fargo products, like a 0.50% discount with a portfolio, a 0.25% discount with consumer checking account, a 0.25% discount with a prior federal or private student loan made by Wells Fargo, and a 0.25% interest rate discount with autopay from a Wells Fargo personal deposit account.
Pros
  • Many opportunities for rate discounts
Cons
  • Only long-term loans available
Credible
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How We Tested

To come up with our list of student loan lenders, we looked for providers with free application processes, and we also started with providers that offer loans to the widest range of students. That means that if a provider only offers loans to students who attend schools in Rhode Island, we left them off the list, no matter how great they might be. (As a side note, this means it’s also a good idea to check out what local credit unions or other companies are offering in terms of student loan packages for the state where you plan to attend school.)

After narrowing down the options by availability, we homed in on the following things:

  • Offers available in both fixed and variable rates
  • A wide range of repayment term flexibility
  • Additional perks, like discounts and cash rewards
  • Co-signer release provisions 
  • Competitive APRs

When it comes to the APRs, these numbers are constantly changing, so it’s important to take advertised numbers with a grain of salt, says student loan expert Heather Jarvis. Students should recognize that “those lowest of advertised rates are available for people with the pinnacle of credit histories, according to the lenders terms,” she said. “It’s very unusual to get those lowest rates. People should understand that their APR is going to be mainly based on their credit history – not just their score, but the history – of both the student and their co-signer.”

Speaking of co-signers, the majority of the providers we included let co-signers drop their responsibilities once certain terms are met, which is a positive for both the student borrower and the co-signer. Again, you’ll want to read your individual contract carefully to ensure you understand just what needs to be done in order for co-signers to be released.

Location Matters

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.

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.

Co-Signers

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 co-signer 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.

How to Get the Best Student Loan

Step 1: Know Your Options
When it comes to student loans, there are essentially two types of options: federal and private. As the name implies, federal student loans come directly from the federal government, and they tend to offer borrowers lower interest rates, more flexible repayment options and more protections than options from private lenders. Most experts suggest students look to maximize their federal student loan borrowing options before tapping into private loans, but the problem with federal loans is that the maximum amount a student can take out tends to be relatively low, and won’t often cover the entire cost of college for most students.

Students who have tapped out their federal loan options have a couple of options, says student loan expertHeather Jarvis. The first is the federal Parent Loan for Undergraduate Students program, called PLUS. These loans have some of the same advantages of federal loans, like flexible repayment and consumer protections, but they aren’t quite as flexible as loans issued directly to students, and the interest rates are somewhat higher.

Step 2: Understand the Terms
Whether you go with private or federal loan – or a combination of both – there are some important terms to keep in mind. The first would be the annual percentage rate, or APR, on the loan. This will be how much additional money you’ll owe based on the original amount you borrow. Rates can be either fixed or variable, and understanding the difference between the two is essential. Government loans are all fixed, meaning the amount of interest you’ll pay on them is set and won’t change over time. Private loans can be either variable or fixed. “Variable rates can often be appealing at the beginning of a loan,” said Jarvis, “and in times like now when interest rates are at historic lows. But variable rate loans will almost certainly go up over time."

Government loans can also be subsidized or unsubsidized. If you qualify, taking out subsidized loans tends to be a better option, says money coach Whitney Hansen. With subsidized loans, the government covers interest on the loan while students are in school at least half time, as well as for the first six months after leaving school (often referred to as a grace period) and during a period of deferment.

Private loans almost always require a co-signer, and the interest rate a student receives on a loan is usually dependent on both the student’s and the co-signer’s credit history and other financial requirements. “That’s one reason why, if parents and students are talking together about options, parents can sometimes qualify for better lending terms on their own merit, rather than co-signing,” said Jarvis. If you do go in on a loan with a co-signer, keep in mind that the co-signer is just as responsible for the loan as the student borrower. Alternatively, the student borrower could also be adversely affected by any financial wrongdoing of the co-signer.

When it comes time to sign a contract for a student loan, Jarvis recommends asking to review the promissory note before doing so. “This is the contract that controls the deal, not the language on the loan provider’s website or words from their salespeople,” she explained. “Many big banks won’t let you look at this, but a lot of the newer options are willing to allow people to look and analyze those.”

Borrowers should also be aware of loans that employ interest capitalization, says Jay S. Fleischman, a student loan lawyer and managing attorney at Shaev & Fleischman, P.C. “Many people don’t know how interest capitalization works, and the specific events that trigger accrued interest to capitalize,” he said. “Capitalization is when the lender adds the interest to the principal balance of the loan. When the interest is capitalized, it becomes principal."

Step 3: Minimize Your Debt
Once you’ve researched your loan options and are up-to-date on the important terms to know, consider some ways in which it will be possible to borrow the least amount of money before you go any further. “Overall, it’s important for students to not over-borrow,” said Hansen. “Working a part-time job to cover living expenses instead of borrowing additional debt to pay for them is almost always a better option.”

Other common ways that Hansen recommends students help offset the costs of college include scholarships directly through their choice of university and working jobs that provide tuition reimbursement. “Working directly for a university also comes with additional perks like discounted tuition,” she added. Remember to also return any student loans you don’t end up using to avoid paying additional interest on them.

Step 4: Consider Your Alternatives
Unfortunately, higher education has become very expensive, says Jarvis, and it’s important for families to sit down and figure out how much they can really afford. Hansen also offers this rule of thumb for avoiding debt you can’t pay off quickly after college: keep your overall student debt lower than the amount of salary you expect to bring in your first year out of college.

Along those same lines, Fleischman recommends weighing the employment prospects for graduates against the cost of attendance – including administrative fees, room, board, and other charges – when choosing a school. This will ultimately help when it comes to making the most financially responsible choice.

Avoiding Student Loan Debt With FAFSA
One way to avoid student loan debt is to fill out the Free Application for Federal Student Aid, more commonly known as FAFSA. Enrolled and soon-to-be college students can fill out the form as early as Oct. 1. Prior to 2016, the forms didn’t open until January, and the extra time can help make sure you file the form correctly and on time. Information to have on hand includes the following:

  • Recent federal tax returns
  • 1099s
  • Current bank statements
  • Social security numbers for both student and parents
  • Child support records
  • The student's driver's license

Parents and the student enrolling all need to provide information to complete the FAFSA. This might sound overwhelming, but the forms are available online for free. It's important to go through the FAFSA process to see if you’re eligible for grant money. Unlike loans, you don't have to pay back grants. This can help alleviate your overall student loan debt load.

How Much Is Too Much?

While federal student loans have caps depending on the type of loan and whether you're an undergraduate or graduate student, private student loan limits vary by company. According to Edvisors, undergraduate students can get as much as $120,000 annually from private lenders. While federal loans might seem safer, private loans are a way to supplement the cost of college if you max out how much you can get through the government.

Even though it might seem like you should get a larger loan than you really need, that's not the case. Only get a loan for what you absolutely need, and try to use other financial aid, such as scholarships, grants and work study income, to pay for your education. If it's at all possible to work while you're in college, you should. That income can go toward your classes whereas if you take out a loan, you have to pay it back later with interest. Speaking of interest, the faster you pay off your loan, the less you put toward interest.

Federal student loans are standardized by the government and therefore charge a lower interest rate. Private student loan companies tend to have a much wider range of interest rates, so it's important to shop around and find the lowest one. Some companies, like Ascent, offer interest rate reductions as a reward. With Ascent, your interest rate is lower if you set up auto-pay with a debit card.

Paying Off Your Debt Quickly

One way to pay off your student loan debt quickly is to go into a career where you’ll earn a substantial amount of money right after college. In 2017, the employment and salary analysis website PayScale found the average return on investment for engineering degrees is substantially higher than a degree from a liberal arts, religious or arts school. The average engineer can make roughly $65,000 annually right out of school, according to Time. If you go into education, you'll make half that and consequently take longer to pay off your student loan debt.

Another thing you can do takes more advance planning. You can attend a college with a historically high return on investment. In 2018, PayScale found the university with the highest return on investment is the United States Merchant Marine Academy. Excluding any private universities or military academies, the New Mexico Institute of Mining and Technology has the highest return on investment for in-state students. Others at the top of the list include Brigham Young University in both Idaho and Utah, Missouri University of Science and Technology, The California Maritime Academy and Montana Tech of the University of Montana. Attending colleges with a high return on investment and going into a high-earning field are both ways you can get out of debt quickly after graduation.

Tips

  • Don't ignore your debt.
  • Always read the fine print.
  • Make more than the minimum payment when you can.
  • Set achievable goals.
  • Some companies offer grace periods, but skip that and start paying immediately.
  • Budget and stick to it.
  • Live below your means.
  • Don't buy things you don't need.
  • Pay off loans with high interest rates first.


Avoiding 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.

The Holidays

Around Christmas time your friends and family will probably start asking what you want for Christmas. This is a good time to take a step back and reevaluate your priorities. While it might be nice to unwrap a pair of headphones or a new winter jacket, Christmas can be a good time to ask your friends and loved ones for money to pay off your student loans. If you’re living on a fixed income, having some holiday money set aside to put toward your monthly student loan payment can be a lifesaver. If you’re lucky enough to receive a substantial amount of money, you could even work with your loan company to up your monthly payment and pay off your debt faster. Paying off your loan faster with a low interest rate is always ideal. Even a little bit can make a big difference. According to Business Insider if you owe $15,000 at a 4.5 percent interest rate on a standard 10 year repayment plan, paying an additional $25 a week on the loan can cut the repayment period in half.

Two-Year vs. Four-Year

When considering how much student loan debt you’ll have and how long it will take you to pay it off, think about whether it’s worth going to college for a full four years. For example, you can graduate with a certificate or degree in as little as a year and still make $30,000 to $60,000 annually, according to Ranken Technical College. If you choose the technical college route, you’ll most likely leave with less debt and have a good chance of finding employment. PBS reported there continues to be a need for skilled service jobs, which technical colleges often offer degree programs in. The average public in-state tuition, fees and other charges was $27,700 annually in 2017, according to the College Board. The majority of students have to take out a loan to pay for most or all of that cost. Comparatively, the average published tuition for two-year colleges was $3,570 annually. While this doesn't include fees and other charges, it's still substantially lower than at a traditional 4-year institution. Thinking about how long you’ll be in college paying for courses and how long it will take you to find a job is an important part of deciding what student loan provider to choose. Whether you go with a technical college or a traditional four-year program, you should talk to the institution's financial aid department to see what programs they offer to make earning your degree more affordable.

Contributing Reviewer: Anna Burleson