After analyzing multiple loans available to students, these 3 options stand out.
Best Student Loans – Quick Answer
- Federal Direct Subsidized Loans – Lowest fixed interest rate, and the government pays the interest while you’re in school.
- SoFi Private Student Loans – Best if you need to supplement federal loans or don’t qualify for federal aid.
- Ascent Independent Student Loans – Best if you lack a cosigner or have a limited credit history.
Choosing the right student loan can have a significant impact on your financial future. Always carefully consider your options, borrow only what you need, and have a solid plan for repayment. If you need personalized advice, consider speaking with a financial aid advisor or a student loan counselor.
Compare the Student Loans for December 2024
| Company | Overall Rating | Loan Amount | Loan Term | APR | Annual Income | Credit Score Required | |
|---|---|---|---|---|---|---|---|
recommended
| Up to 100% of your school cost | 5 – 20 years | Starting at 4.89% | $24,000 | 680 | See offer | |
| $2,000 to $400,000 | 5-15 years | Starting at 2.52% | $24,000 | 540 | See offer | |
| $1,000 to $50,000 | 3-5 years | 6.53% – 35.99% | $12,000 | 580 | See offer | |
recommended
| $5,000 to $100,000 | 5-15 years | Starting at 1.05% | $45,000 | 700 | See offer | |
| $1,000 to 100% of school cost | Up to 20 years | Starting at 1.12% | N/A | 750 | See offer | |
| $1,000 to 100% of school cost | 5-15 years | Starting at 0.99% | $35,000 | 758 | See offer | |
| $1,000 to 100% of school cost | 5-15 years | Starting at 0.99% | $35,000 | 600 | See offer | |
| $3,000 up to $10,000 | Up to 10 years | 7.49 – 12.99% | None | None | See offer |
| Company | Overall Rating | Loan Amount | Loan Term | APR | Annual Income | Credit Score Required | Get Started |
|---|---|---|---|---|---|---|---|
|
recommended
| Up to 100% of your school cost | 5 – 20 years | Starting at 4.89% | $24,000 | 680 | See offer | |
|
| $2,000 to $400,000 | 5-15 years | Starting at 2.52% | $24,000 | 540 | See offer | |
|
| $1,000 to $50,000 | 3-5 years | 6.53% – 35.99% | $12,000 | 580 | See offer | |
|
recommended
| $5,000 to $100,000 | 5-15 years | Starting at 1.05% | $45,000 | 700 | See offer | |
|
| $1,000 to 100% of school cost | Up to 20 years | Starting at 1.12% | N/A | 750 | See offer | |
|
| $1,000 to 100% of school cost | 5-15 years | Starting at 0.99% | $35,000 | 758 | See offer | |
|
| $1,000 to 100% of school cost | 5-15 years | Starting at 0.99% | $35,000 | 600 | See offer | |
|
| $3,000 up to $10,000 | Up to 10 years | 7.49 – 12.99% | None | None | See offer |
What Is a Student Loan?
A student loan is a type of financial aid designed to help students pay for post-secondary education and associated fees. These loans can cover tuition, room and board, books, and other education-related expenses.
Questions About Student Loans
Are student loans good or bad?
Student loans can be a valuable tool for financing education, but they should be used responsibly. They’re considered “good debt” if they lead to increased earning potential, but overborrowing can lead to financial strain.
What are federal student loans?
Federal student loans are loans funded by the U.S. Department of Education to pay for your studies. The terms and conditions of these loans are guided by Federal law.
What are the main types of federal student loans?
The main types are Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans (for graduate students and parents).
What is student loan forgiveness?
The term student loan forgiveness refers to when your student loan balance is completely forgiven and you are not required to make any further payments to your lender.
How do I apply for student loan forgiveness?
Eligibility for loan forgiveness depends on your loan type and career path. Common programs include Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness. Visit studentaid.gov for more information on these programs.
Should I choose a fixed or variable interest rate?
Fixed rates offer predictability and are often better for longer-term loans. Variable rates may start lower but can increase over time, making them potentially suitable for shorter-term loans if you plan to pay them off quickly.
How does student loan interest work?
Interest on student loans typically accrues daily. For unsubsidized loans, interest begins accruing as soon as the loan is disbursed. For subsidized federal loans, the government pays the interest while you’re in school and during grace periods.
Are there disadvantages to student loans?
Student loans may be expensive to pay back and often it means you’ll start out life with debt. You may have to put off other life or career goals while paying off student loans.
What are private student loans?
Private student loans are loans obtained from lenders such as banks and other private institutions with the goal of funding your studies.
How Student Loans Work
Student loans are unique as they are specifically designed for funding education. But why are they different from personal loans and credit cards?
The funds are disbursed to your school or college and you may be able to only start repayments after you’ve graduated.
Also, keep in mind that private student loan providers may have their own requirements and rates, and these will vary, unlike typical personal loans.
You may also apply with a co-signer which may significantly improve your chances of being approved for a private student loan.
If you don’t have a co-signer, lenders like Ascent Funding are a good option for undergraduate and graduate student loans.
Why Student Loans Are Considered “Good Debt:”
- Investment in future earning potential
- Typically lower interest rates compared to other types of loans
- Flexible repayment options, especially for federal loans
- Potential tax benefits on interest payments
Federal Student Loans
Federal student loans are offered by the U.S. Department of Education and are often the first choice for many students due to their benefits and protections.
Benefits of Federal Student Loans:
- Fixed interest rates
- Income-driven repayment plans
- Loan forgiveness options
- Deferment and forbearance options
- No credit check required (except for PLUS loans)
Types of Federal Student Loans
- Direct Subsidized Loans: For undergraduate students with financial need. The government pays the interest on these loans while the student is still in school, in a grace period, or in paused payments through deferment.
- Direct Unsubsidized Loans: These loans are available to undergrads and graduate students. You don’t have to show financial need but you are responsible for interest payments all the time.
- Direct PLUS Loans: For graduate students and parents of dependent undergraduate students. They have higher interest rates and fees than other federal loans and you need to undergo a credit check.
- Pell Grant: Undergraduate students with exceptional financial needs, students in a post-baccalaureate teacher certification program, and students with parents killed in Afghanistan or Iraq after 9/11 may qualify for a Pell Grant. A Pell Grant does not have to be repaid, except under certain circumstances.
Current Federal Student Loan Interest Rates
| Loan Type | Borrower | Interest Rate |
|---|---|---|
| Direct Subsidized and Unsubsidized | Undergraduate | 6.53% |
| Direct Unsubsidized | Graduate or Professional | 8.08% |
| Direct PLUS | Parents and Graduate or Professional Students | 9.08% |
Private Student Loans
Private student loans are offered by banks, credit unions, and online lenders. They can be a good option if you’ve maxed out your federal loan options or if you can qualify for a lower interest rate.
Features of Private Student Loans
- Credit-based approval: Your credit score and history will affect your eligibility and interest rate
- Variable or fixed interest rates: You may have the option to choose between the two
- Cosigner option: A cosigner with good credit can help you qualify for better rates
- Varying repayment terms: Usually ranging from 5 to 20 years
Important Considerations for Private Loans:
- May have higher interest rates than federal loans
- Fewer borrower protections and flexible repayment options
- May require payments while you’re still in school
- Typically do not offer loan forgiveness programs
Types of Private Student Loans
- Bar Exam Loans: A bar exam loan will cover expenses that a normal student loan won’t. This covers expenses like exam application fees, living expenses, and prep classes while law students study for the bar exam. The loan terms on bar exam loans range from one to 20 years and they typically have higher interest rates than federal or private loans.
- Credit Union Loans: You may also get a loan from a credit union or community bank. You may also have more favorable terms and discounts if you already have an existing relationship with the institution.
- International Student Loans: In general, students who are not U.S. citizens won’t qualify for traditional student loans. Several private lenders offer student loans for international students; however, they often require a co-signer that is a U.S. citizen.
Compared to traditional personal loans, private student loans have many benefits to offer and they also provide a wider range of options.
Instead of a federal student loan with a fixed rate and term, you may choose a student loan that has a variable rate and a longer or shorter repayment.
Best Private Loans Based on Our Analysis
While these options are generally considered among the best, the ideal student loan for you depends on your individual circumstances, including your financial need, credit history, and future career prospects.
Always compare multiple options and consider consulting with a financial aid advisor before making a decision.
Remember, it’s generally advisable to exhaust federal loan options before turning to private loans, as federal loans offer more borrower protections and flexible repayment options. However, private loans can be a good option to fill funding gaps or for those who don’t qualify for federal aid.
1. SoFi Private Student Loans
For those who need to supplement federal loans or don’t qualify for federal aid, SoFi offers some of the best private student loan options.
Why SoFi Private Student Loans Stand Out:
- Competitive interest rates – Fixed APR: 3.99% – 14.83%. Variable APR: 5.74% – 15.86% as of 2024
- Flexible repayment terms – 5, 8, 10, or 15 years
- No fees – No origination fees, no late fees, no insufficient funds fees
- Unique perks like career coaching and financial advice
- Option to add a cosigner and cosigner release after 24 months of on-time payments
2. Ascent Independent Student Loans
Ascent offers an innovative approach to private student loans, particularly beneficial for students without a cosigner or those with limited credit history.
Why Ascent Independent Student Loans Stand Out:
- Offers loans based on future income potential, not just current credit score
- Competitive rates – Fixed APR: 3.69% – 15.21%. Variable APR: 5.99% – 15.95% as of 2024)
- 1% cash back upon graduation
- Flexible repayment options, including deferred payments while in school
- Cosigner release option after just 12 months of on-time payments
How to save $619.00 on your loan
The price difference for a $500.00 loan in 90 days is $619.00.
How to Apply for Student Loans
Applying for student loans involves several steps, whether you’re seeking federal or private loans. Here’s a streamlined guide to help you through the process:
Steps to Apply for Student Loans
Follow these steps to apply for both federal and private student loans:
Steps
Complete the FAFSA
Fill out the Free Application for Federal Student Aid (FAFSA) at studentaid.gov. This is required for federal loans and often for private loans too.
Review Your Student Aid Report
After submitting your FAFSA, you’ll receive a Student Aid Report summarizing your financial information. Review it for accuracy.
Receive and Compare Financial Aid Offers
Schools will send you financial aid offers, including federal loan options. Compare these carefully.
Consider Private Loans if Needed
If federal aid isn’t sufficient, research private lenders. Compare rates, terms, and borrower protections.
Gather Required Documents
Collect necessary documents like proof of income, identity, and school enrollment.
Apply for Chosen Loans
For federal loans, accept the offer through your school. For private loans, apply directly with the lender, often online.
Complete Entrance Counseling
For federal loans, complete mandatory entrance counseling to understand your responsibilities.
Sign the Loan Agreement
Sign the Master Promissory Note for federal loans or the loan agreement for private loans.
Wait for Approval and Disbursement
Once approved, the funds will typically be sent directly to your school.
Important Tips
- Apply early to ensure you have all options available
- Borrow only what you need
- Understand the terms and conditions of each loan
- Consider adding a creditworthy cosigner for private loans to potentially get better rates
- Keep track of all your loans and lenders
Remember, federal loans typically offer better terms and protections than private loans, so it’s usually best to exhaust federal options first. Always borrow responsibly and have a plan for repayment. If you’re unsure about any part of the process, don’t hesitate to contact your school’s financial aid office for guidance.
FAFSA Deadlines:
- Federal Deadline: June 30, 2025 for the 2024-2025 academic year
- State Deadlines: Vary by state, some as early as February
- School Deadlines: Often earlier than state and federal deadlines
Always check with your school’s financial aid office for specific deadlines and requirements.
Comparing Student Loan Options
When comparing student loan options, consider the following factors:
- Interest rates: Compare APRs for both fixed and variable rate options
- Loan terms: Look at the repayment period and when repayment begins
- Fees: Check for origination fees, prepayment penalties, and late payment fees
- Borrower protections: Consider options for deferment, forbearance, and income-driven repayment
- Eligibility requirements: Understand credit score and income requirements
- Cosigner release: For private loans, check if and when a cosigner can be released from the loan
Pro Tip:
Always exhaust your federal student loan options before turning to private loans. Federal loans offer more borrower protections and flexible repayment options.
Student Loan Refinancing
Refinancing your student loans can potentially lower your interest rate or adjust your loan term. Here’s what you need to know:
- Eligibility: Typically requires good credit and stable income
- Federal vs. Private: Refinancing federal loans into private loans will cause you to lose federal benefits
- Potential savings: A lower interest rate can save you money over the life of the loan
- Loan terms: You may be able to choose a new repayment term that better fits your financial situation
Caution:
Carefully consider the pros and cons before refinancing federal student loans into private loans, as you’ll lose access to income-driven repayment plans and loan forgiveness programs.
Remember, investing in your education can pay off in the long run, but it’s crucial to borrow wisely and understand the terms of your loans. With the right approach, student loans can be a valuable tool in achieving your educational and career goals.
