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5 Best Student Loans
By Stephanie Colestock MONEY RESEARCH COLLECTIVE
Undergrad, Graduate, Parent PLUS
Fixed: 2.84% - 17.99% Variable: 3.89% - 17.99%
Fixed: 2.84% - 15.99% Variable: 2.84% - 15.99%
0.25% APR discount with AutoPay
No application or origination fees. No prepayment penalties. Does charge late fees.
Undergrad, Graduate
Fixed: 3.28% - 13.02% Variable: 1.47% - 11.31%
Fixed: 3.21% - 13.02% Variable: 1.46% - 10.81%
0.25% or 2%, depending on the loan
Graduate loans only: 1% cashback and discount for automatic debits
Undergrad,Graduate, Parent PLUS
Fixed: 3.65%-15.52% Variable: 4.99%-16.33%
Varies by lender
Varies by lender
Varies by lender
Undergrad, Graduate
Fixed: 3.49% –10.66% Variable: 11.11%–11.22%
Fixed: 3.29%–12.94 Variable: 1.09% – 11.33%
0.25% APR discount with AutoPay
No application or origination fees. No prepayment penalties.
The vast majority of today’s college students must finance their education with student loans that often run into the tens of thousands of dollars. When it comes to taking out that debt, students have the choice of federal loans — issued by the U.S. Department of Education — or private student loans offered by various lenders across the country.
There are many great benefits to federal student loan programs, making them a worthy first choice. However, these loans may not be available to all borrowers, and in many cases, they may not offer enough money to cover all of a student’s expenses. That’s where private loans come in.
Here is our guide to finding the best student loans, as well as what you will need to qualify.
Federal Student Loans
Best Private Student Loans
- Best Overall: College Ave
- Best for Parent Borrowers: SoFi
- Best Marketplace: Credible
- Best for Student Borrowers: Ascent
- Best for Co-signers: LendKey
Our Top Picks for Best Student Loans
Federal Student Loans
Offered by the U.S. Department of Education, federal student loans provide educational funding for eligible borrowers at both public and private institutions. These loans offer a variety of benefits and repayment options that private loans do not, and may be more accessible to borrowers with limited credit histories or income.
There are four types of federal student loans to choose from, depending on who is borrowing (the student or their parents), whether those loans are for undergraduate or graduate programs, and whether the borrower demonstrates financial need.
Direct Subsidized Loan
- Only undergraduate loans
- Financial need must be identified
- Between $5,500 and $12,500 can be borrowed by undergraduate students annually, depending on school year and dependency
- Interest will be paid by the government while the student is enrolled half-time or more, during a grace period of up to six months after the student leaves school, and on loans that are in deferment
Direct Unsubsidized Loan
- Offered to undergraduate, graduate, and professional students
- No financial need required
- Interest charges are not subsidized, regardless of enrollment or repayment status; the borrower is responsible for all accrued interest
- Graduate and professional students can borrow up to $20,500 per year, up to aggregate limits
Direct PLUS Loans
- Available to those attending graduate school or professional students (Direct PLUS Loans) or parents (Parent PLUS Loans)
- Cannot be directly taken out by undergraduate borrowers
- Approval is credit-based
- Borrowers with bad credit may still qualify by meeting other requirements
- Borrowing limits are based on actual educational expenses minus any other financial aid received
Direct Consolidation Loans
- Available to student borrowers with more than one federal loan
- Used to combine all federal loans into one balance, with one interest rate and one monthly payment
- Consolidation is offered at no cost
- Fixed rate is calculated as an average of all consolidated loans’ interest rates
Best Private Student Loans Reviews
Here’s a look at our top five private student loan lenders, and why we chose each.
Best Overall: College Ave
College Ave Student Loans is our overall top pick for private student loans because they offer the greatest degree of flexibility for borrowers, featuring many different loan products, repayment terms, and a simple co-signer release option. Undergraduate, graduate, and professional students, as well as their parents, can take out private loans through College Ave, with an online application process that takes about three minutes to complete. Both fixed APR (2.94% to 12.99%) and variable APR (0.94% to 11.98%) rates are available, all offering autopay discounts.
Multiple repayment plans are offered, ranging from immediate repayment to full deferment. Five- to 15-year terms are available. Most borrowers will require a co-signer, but co-signers can be released after just 24 on-time, consecutive payments.
A credit check is required to qualify, though College Ave does offer an online prequalification with just a soft pull. There are no origination fees or early repayment fees.
Best for Parent Borrowers: SoFi
SoFi is our top pick for parent borrowers looking to take out loans on behalf of their student children. Unlike most of their competitors, SoFi has a simplified application process, offers forbearance protection if parents become unexpectedly unemployed, and meets or beats comparative loan offers.
SoFi’s online application process takes only minutes to complete. The company offers undergraduate, graduate, professional, or parental loans starting at $5,000. Fixed (3.22% to 11.16% APR) and variable (1.10% to 11.68% APR) rates are available with a 0.25% autopay discount. If you find a better rate elsewhere, SoFi will try to match it with just a phone call or online chat.
SoFi does not charge origination, early repayment, NSF or late fees. Loans are offered with five, seven, 10 or 15 years repayment terms. Private student loans through SoFi allow for a six-month grace period after graduation, as well as forbearance options through their unemployment protection program.
A minimum credit score of 680 is required to qualify. Co-signers can only be released by refinancing the loan(s) entirely.
Best Marketplace: Credible
Credible earns our nod for the best student loan marketplace, thanks to its simplified loan-shopping process and its best-rate guarantee.
Rather than offering its own student loans, Credible provides a loan shopping service that lets borrowers shop for undergraduate, graduate, professional and parent loans from multiple online lenders all in one place. This saves borrowers time and energy and gives them many options for loan terms, repayment plans, and rates.
Many of Credible’s partner lenders do require a credit score of 680 or higher to qualify. None of their lenders charge origination, service or prepayment penalty fees, and both fixed interest rates (2.94% to 13.16% APR) and variable interest rates (0.94% to 11.98% APR) rates are offered with autopay discounts. And if Credible cannot find you the lowest possible rate, they’ll give you $200 with their Best Rate Guarantee.
Best for Student Borrowers: Ascent
Ascent topped our list as the best option for student borrowers for two reasons: many of its loans do not require co-signers and both credit-based and outcomes-based non-cosigned loans are offered. To qualify, borrowers must either have two years of credit history and an income of at least $24,000 or meet other criteria regarding their graduation date, GPA, major and other factors. If necessary, a co-signer can be added.
Fixed (3.44% to 13.16% APR) and variable (1.47% to 10.80% APR) rates are offered, though some borrowers may find these rates higher than those offered by other private lenders. This is especially true for non-cosigned outcomes-based loans, which have rates starting at 8.90% APR variable and 10.71% APR fixed.
There are no origination, application or prepayment penalty fees, and borrowers can receive up to 1% cash back after signing up for automatic payments. Progressive repayment options are available, and Ascent offers up to a nine-month grace period after graduation to begin loan repayment.
Best for Co-Signers: LendKey
With a short co-signer release period and many partner banks to choose from, LendKey snags our pick for the best student loan servicer for borrowers looking to apply with a co-signer.
Though LendKey is a student loan marketplace — one that partners with a number of non-profit credit unions and community banks — LendKey directly services all of the student loans issued through its application process. This means that LendKey will remain the borrower’s point of contact, even though the lender will dictate the actual terms of the loan. This practice minimizes the frustration that many students who arrange their loans through other marketplaces experience when their loans are passed from servicer to servicer.
Requirements for student loans through LendKey vary by lender, but a minimum credit score of 660 and a minimum income of $24,000/year is required in order to qualify without a co-borrower. Only one repayment term is offered — 10 years — though up to six months of forbearance is available if needed. Co-signers can be released after 12 to 36 months of consecutive, on-time payments (depending on the lender).
There are no application fees and rates start at 1.49% APR for variable and 3.99% APR for fixed, both with an autopay discount.
Student Loans Guide
How do student loans work?
Student loans provide borrowers with the funding necessary to cover educational expenses, including tuition, lab fees, room and board, books and more. Depending on the lender, these loans may be offered to:
- Undergraduates
- Grad students
- Professional students
- Students working on non-degree certifications
Student loans are also offered to parent borrowers, who may better meet credit- and/or income-based requirements.
These loans begin accruing interest from the time of disbursement, at the agreed rate. Once the student graduates, withdraws from school or, in some cases, drops below a certain number of credit hours, repayment is required.
Types of student loans
There are two primary types of student loans to choose from, depending on eligibility and how much the student needs to borrow.
Federal student loans
Federal student loans are offered by the U.S. Department of Education. They may be subsidized or unsubsidized, and students may be required to demonstrate financial need. Federal student loans typically have maximum borrowing limits, which means they may not fully meet high-cost educational needs.
Federal student loans offer many valuable benefits, including:
- Loan forbearance or deferment: These options allow you to temporarily stop making minimum payments on your student loan — or, in the case of forbearance, reduce your monthly payment amount — due to a financial hardship of some kind. Typically, interest will continue to accrue on your loan balance(s) when in either forbearance or deferment, so you won’t make any progress toward your debt payoff during this time. However, there are a few exceptions when deferment allows for interest charges to also pause.
- Income-driven repayment (IDR) plans: Eligible borrowers may be able to reduce their minimum monthly student loan payments based on their discretionary income and family size with an income-driven repayment plan. There are four plan options, each helping to ensure that one’s student loan debt doesn’t account for too much of their monthly income. At the end of the agreed IDR repayment term, any remaining student loan balance is forgiven.
- Federal student loan forgiveness: Public service loan forgiveness programs, or PSLFs, offer loan forgiveness on any remaining eligible loan balances after the borrower makes 120 eligible payments. PSLF is available to borrowers who work full-time for a qualifying employer, such as government organizations, non-profits, the military, and more.
Private student loans
Private student loans are offered by various lenders, such as credit unions, banks, and other financial institutions. These loans are credit-based, so younger students or those with a limited income/credit history may need a co-borrower to qualify.
Private student loans lenders offer higher borrowing limits — and, depending on your situation, can feature lower interest rates — than federal government options, though they do not have the same benefits in repayment (like loan forgiveness or income-based monthly payments).
Student loan terms
The repayment term associated with student loan(s) will dictate how long the borrowers have to satisfy the debt and how much their monthly payments will be along the way.
Federal student loan terms
The standard federal student loan repayment term is 10 years. However, depending on the borrower’s total federal education debt, their Direct Consolidation loan term could range from 10 to 30 years in length.
Certain federal repayment programs — such as income-driven repayment plans — have loan terms up to 25 years.
Private student loan terms
Private student loan lenders can establish their own loan repayment terms, so these may vary. Typically, terms range anywhere from five to 20 years in length. Borrowers may also be able to choose the loan term they wish to follow according to each provider and loan.
Federal student loans vs. private student loans
| Federal student loans | Private student loans | |
| Financial need required | Yes, for certain loans | No |
| Credit-based | Only for certain loans | Yes, typically |
| Loan limits | May be as low as $5,500 per year | Depend on the lender, but generally very high |
| Student loan interest rates | Set by federal law: currently 3.73% to 6.28% APR fixed | May be variable or fixed, ranging from under 1% to over 13%. (Lower rates generally available to those with good credit.) |
| Forbearance/deferment offered | Yes | Not typical |
| Income-based payments | Yes, for eligible borrowers | No |
| Loan forgiveness | Yes, for eligible borrowers | No |
| Loan terms | 10 years (standard) | 5 to 20 years is typical |
How to apply for student loans
Once you know how much you need to borrow for your educational expenses, you can begin applying for student loans. The process is fairly simple:
- Compare federal and private loans to decide which is best for you. If you choose federal, you must start by completing the Free Application for Federal Student Aid (FAFSA) form. (This also allows you to apply for federal grants and work-study.)
- Consider your credit history and what loans you’ll be eligible for.
- Provide necessary information such as your name, address, SSN, date of birth, email, phone number, and school information.
- Go through the prequalification process to see if you will need a co-signer.
- If required, add your co-signer’s information.
- Once approved, provide necessary information and documentation: income, employment, tax returns, enrolled school, household expenses and expected total cost of attendance.
- Sign your promissory note (guarantee to repay the loan).
How to pay off your student loan
Each loan type and lender will have its own repayment process and requirements. Your lender will reach out to you prior to your expected graduation — or, if you withdraw, once they are notified of your change in enrollment — with further details.
Loan repayment generally involves a set monthly installment that covers the principal balance and finance charges on the loan. This can change if you choose to
- repay the debt early
- make additional monthly payments
- Student loan refinancing (through the same lender or one of these best student loan refinance lenders)
What happens if you don’t pay student loans?
If you can’t pay your student loans according to the agreed terms, it’s important to contact your lender as soon as possible. They may offer deferment or forbearance options, allowing you to pause monthly payments due to unemployment or other financial hardship. This will prevent your loan(s) from going into default.
If you fail to make your agreed student loan payments, you may be faced with penalties and fees, in addition to capitalization (or interest charges that are added to your principal balance, and later compound). If you default on your school loans, your credit score and credit report will both be negatively affected for years to come.
What happens to student loans when you die?
Upon the death of a student loan borrower, any remaining federal student loans (or Parent PLUS) loans will be discharged tax-free. Neither your family members nor co-borrowers will be responsible for those balances.
If you have private student loans that originated pre-2018, your lender may file against your estate for the remaining debt. This means that your loved ones’ inheritances could be reduced.
Private loans originated after 2018 must be discharged after the borrower’s death, thanks to updates to the Truth In Lending Act (TILA). This also applies to your co-borrowers on those loans.
How We Chose the Best Student Loans
In order to choose the best student loan options, we first compared both federal and private student loan products, looking at the pros and cons of each. This meant considering factors such as rates, eligibility requirements, maximum loan amounts and repayment benefits.
To determine the best private student loan lenders, however, we looked at specific criteria for this type of loan. This meant looking for lenders with:
- A simplified loan application process
- No-credit-impact prequalification
- Competitive interest rates
- No fees
- No co-signer loans or flexible co-signer release options
We also included two student loan marketplaces in this list, to help borrowers compare multiple lenders in one place.
Summary of the Best Student Loans
Best Federal Student Loans:
Best Private Student Loans:
- College Ave — Best Overall
- SoFi — Best for Parent Borrowers
- Credible — Best Marketplace
- Ascent — Best for Student Borrowers
- LendKey — Best for Co-signers
Stephanie Colestock is a DC-based personal finance writer with nearly 11 years of freelance writing experience. She covers a wide range of finance-related topics and is currently working toward her CFP®️ certification. Her work appears on sites such as Business Insider, MSN, Fox Business, CNET, Investopedia, and more.