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6 Best Student Loans
By James F. Trumm MONEY RESEARCH COLLECTIVE
Undergrad, Graduate, Parent PLUS
Fixed: 2.84% - 17.99% Variable: 3.89% - 17.99%
Fixed: 2.84% - 15.99% Variable: 3.89% - 15.99%
0.25% APR discount with AutoPay
No application or origination fees. No prepayment penalties. Does charge late fees.
Undergrad, Graduate
Fixed: 4.50% - 15.49% Variable: 6.12% - 16.45%
Fixed: 4.75%– 12.11% Variable: 2.12%– 11.64%
0.25% APR discount with AutoPay
No application or disbursement fees. Does charge late fees and returned check 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: 2.69% - 17.99% Variable: 3.50% - 17.99% APR
Varies by lender
Varies by lender
Varies by lender
Student loans are a responsibility that borrowers will shoulder for a decade or longer. So it’s important to weigh your options carefully to make sure that you make the right choice for your future.
Taking advantage of the best student loans will help you reach your educational and financial goals. This guide outlines the best lenders of 2022, taking into consideration repayment options, interest rates and perks offered by each one.
What to Consider When Choosing a Lender
When considering student loans, you need to keep two major things in mind: interest and repayment flexibility. In order to pay the least amount possible while preparing for unexpected life events, find an option that offers low interest rates and repayment plans that fit your lifestyle and financial goals.
After you’ve narrowed down your choices, look closer at the specifics. Ask about fees, perks, discounts and cosigner policies. These smaller details may help you decide which lender ultimately offers the best deal for your unique situation.
Another factor to keep in mind is the lender’s reputation. Make sure the lender you choose is trustworthy by checking reviews from the Better Business Bureau. You can also search the Consumer Finance Protection Bureau to find out about disciplinary action taken against the lender.
Our Top Picks for Best Student Loans
We analyzed the best private student loans across the market and selected six outstanding lenders, including two marketplace picks that can help you compare more of the best offers. In 2022, the best student loans are:
College Ave: Best Overall
Sallie Mae: Best for Graduate Students and Non-Degree-Granting Schools
Credible: Best for Parents
SoFi: Best for No Fees and Discounts
Ascent: Best for Borrowers Without a Cosigner
LendKey: Best Marketplace
The private lenders on this list stand out because
- they provide unique loans for all kinds of students
- they offer flexible repayment plans
- their interest rates are competitive
- they waive certain fees, and
- they have strong reputations in the financial industry
Federal Student Loans: Pros and Cons
Your loan research should start with federal student loans. These generally offer better deals than private loans. For instance, they have a low fixed interest rate and several repayment options. Plus, if you choose certain career paths, you may become eligible for loan forgiveness.
Some other advantages of federal student loans include the free application process and the lack of a credit check.
However, federal loans are not without drawbacks. The subsidized loans are need-based, so you may not receive enough financial aid to cover all your expenses. Loans for graduate school aren’t subsidized at all. Finally, federal loans are available only for US citizens.
Different Types of Federal Loans
There are four types of federal student loans. The biggest differences between them are the specific eligibility requirements and whether they are unsubsidized or subsidized.
Direct Subsidized Loans are for undergraduate students with financial need. How much you get depends on the cost of your school. The biggest benefit of this type of direct loan is that you don’t pay interest during your schooling, during the six-month grace period after graduation or during deferment — the Department of Education pays the interest for you.
Direct Unsubsidized Loans are available to all students, and you don’t have to display financial need to receive them. You are responsible for all interest, which begins accruing right away. However, the interest rates for a Direct Unsubsidized Loan are generally much lower than for private loans.
Direct PLUS Loans can cover the extra expenses that subsidized or unsubsidized loans don’t cover. Grad students, professional students and parents can all take out a PLUS loan, but they do require a credit check.
Finally, Direct Consolidation Loans are for students who have already received student loans. They combine all your federal loans into one, managed by one servicer. Monthly payments are usually lower when you take advantage of this option, but you could pay more in interest over time.
Federal loans may not cover all of your expenses because, often, your level of financial need is less than the total cost of attendance. In cases like these, you will need to look into private loans to supplement your federal aid.
Best Overall: College Ave
In the private loan category, College Ave makes it the easiest to apply and get your money. You can get approved entirely online in just a few minutes and receive free prequalification without a lengthy credit check. While most private lenders take between two and ten weeks to disburse your funds, College Ave typically gets it done in as little as ten days.
Other private lenders generally let you choose between two repayment options; College Ave gives you four. The options include full payments right away, interest-only payments during school, $25 flat monthly payments during school, or full deferment until you graduate. You can choose the option that lets you focus on your studies rather than harrowing loan debt statistics.
College Ave offers fixed interest rates starting as low as 3.24% for undergraduate loans. Variable rates are also low, starting at 0.94% for undergrads. This includes the 0.25% APR discount you get by enrolling in automatic payments. Plus, you don’t have to worry about application, origination or prepayment fees.
However, there are a few downsides. For example, to qualify for cosigner release, over half the payments must be made on time. Also, you can’t use College Ave to refinance student loans that your parents took out.
Best for Graduate Students and Non-Degree-Granting Schools: Sallie Mae
Most private lenders don’t offer student loans for non-degree-granting programs such as culinary, aviation, or technical schools. Sallie Mae is different; it serves nontraditional students of all kinds, from those earning certificates to returning students and more. Sallie Mae also offers a loan for part-time students—which not a lot of lenders do.
Sallie Mae is also a smart option if you want unique repayment options. All borrowers have the choice to make interest-only payments for up to a year after graduation to ease the transition from school to career—a perk exclusive to Sallie Mae. And Sallie Mae has exceptional repayment perks for military servicemembers, including interest rates capped at 5% and extended SRCA benefits.
Average interest rates for undergraduate students sit between 3.50% and 12.60% fixed, and 1.13% and 11.23% variable. You can also get a 0.25% discount with autopay. Plus, there are no application or disbursement fees.
However, Sallie Mae does have some drawbacks. You won’t know your individual rate until you apply. And you also need a credit check, which will temporarily lower your FICO score.
Best for Parents: Credible
Credible makes finding student loans easy for parents; it’s a marketplace that can help you compare the best loans side by side. Not many marketplaces compare parent loans, but Credible can help you find one and prequalify, all without a hard credit pull.
Other marketplaces compare the top lenders, but you still need to run the numbers to find the best deal. In contrast, none of Credible’s partners charge fees for application, origination or prepayment, so you can decide which loan is right for you much faster and with no surprises. On top of that, Credible can help you with loan consolidation when you need it.
Keep in mind that most Credible partners require a credit score over 680. Also, terms and conditions will vary based on the lender you choose.
Best for No Fees and Discounts: SoFi
SoFi offers the most perks of any lender on this list. You get more than a loan by choosing SoFi; you also get:
- a free financial course on Coursera
- three months of Grammarly
- Best of Evernote for six months
On top of that, family members can benefit from a $400 discount on SAT and ACT test prep courses.
The discounts don’t end there—SoFi doesn’t charge application, prepayment or origination fees.
Unemployment protection is another perk of SoFi loans that no other lender provides. If you lose your job, you can qualify to defer payments for up to a year. However, your loan will continue to accrue interest. SoFi also offers options to defer payments for six months after graduation or pay low fixed payments during school.
Interest rates for undergrads start at 1.36% variable and 3.47% fixed with autopay. However, SoFi isn’t right for everyone: it requires a minimum credit score of 680 and a minimum loan of $5,000.
Best for Borrowers Without a Cosigner: Ascent
Ascent is unique because it rewards students for their academic performance. Undergraduate juniors and seniors can apply without a cosigner if their GPA is 2.9 or higher—even if their credit doesn’t meet minimum requirements. On top of that, Ascent offers a 1% cashback graduation reward.
Depending on the type of loan, Ascent offers several loan repayment plans. All Ascent student loans are eligible for interest-only or flat payments during school, but you might be able to defer the loan for up to three years.
Ascent doesn’t charge fees for application, origination, disbursement or early repayment. In addition, referring your friends could earn you $525 for each friend.
On the downside, Ascent’s interest rates are often higher than those of other private lenders. Undergraduate rates are between 1.47% and 9.05% for variable rate loans and 4.36% and 12.33% for fixed rates. Graduate students may pay up to 14.08% in fixed rate interest. These rates include the 0.25% autopay discount.
Best Marketplace: LendKey
LendKey is our pick for best marketplace because, unlike other marketplaces, it favors community banks and credit unions over big banks. Smaller institutions tend to offer better rates and terms for borrowers. With over thirteen thousand partners, LendKey can help you find and compare loans nationally and regionally. In addition, the LendKey platform automates the loan process, allowing you to get the best rates from the loan providers.
Rates, terms, fees and eligibility requirements vary widely on LendKey, though you’ll never pay an application fee. Also, you can use the loans for any education-related expense, from tuition to textbooks. You even get a $200 bonus for every friend you refer.
One drawback is that if you have bad credit or low income, you’ll need to have a cosigner. On the bright side, LendKey offers a cosigner release after one to three years of on-time loan payments. They also help with student loan refinance and consolidation plans.
Student Loans Guide
The student loan process is simple. After completing your research, you must apply for the loans. The federal loan process begins with the Free Application for Federal Student Aid (FAFSA). You can fill it out any time between Oct. 1 and June 30 even if you haven’t applied to your school yet.
Private student loan lenders have online tools that walk you through the application steps, but you should wait until after you’ve been accepted at the school of your choice; that way you’ll know how much money you need. There are no deadlines or timetables for private loan applications.
After approval, the money goes directly to your school to cover tuition, fees, and room and board. The school will send any leftover money to you through a refund check or direct deposit after your semester begins. You can use these funds for any school-related costs, including books and living expenses.
Interest and repayment depend on the type of loan. The Federal Direct Subsidized Loan, for instance, doesn’t accrue interest until after you graduate. Unsubsidized loans and private loans will start adding interest right away.
Be on the lookout for scams when you start repayment! Scams commonly promise to forgive your loans; don’t trust them, and never send money to someone who promises to forgive or cut your student loan debt. The only way to find information about your loan or student debt relief is through your loan servicer or through the US Department of Education’s Student Loan Forgiveness page.
The Types of Loans Available
The two major types of loans for higher education are federal and private. The government distributes federal loans based on each student’s needs, and legislation and regulations outline the loan terms and conditions. Private student loans, on the other hand, come from lenders like banks and credit unions. They set their own terms and often require credit checks and cosigners, like any other type of private loan.
Federal loans offer protections that private loans don’t. They are also sometimes eligible for loan forgiveness programs. For instance, teachers working full-time can apply for loan forgiveness after a few years. Full-time nonprofit and government employees are also eligible.
How to Repay Your Loans
The standard repayment plan for federal loans involves a fixed payment every month for 10 years, but there are other options. The graduated repayment period starts off with low payments that increase every two years—hopefully to match your increasing salary.
Extended repayment plans can last up to 25 years, either fixed or graduated. Finally, your payments could be tied to your income. You’ll pay a set percentage of your discretionary income for 20 or more years.
Private lenders have their own repayment terms, but most allow you to defer payments until after you graduate. They may also have a grace period before your first payment comes due, but interest will continue to accrue even if they haven’t started sending the bills.
The best strategy for paying off loans is to pay as much as possible as quickly as possible. The real burden of student loan debt comes from interest—it can add up to thousands of dollars more than the cost of your education. If you can, start making interest payments while you’re still in school.
Another thing you can do is pay more than your monthly minimums. This will keep your interest payments down while also chipping away at the principal.
You also have the option to refinance or consolidate your school loans. Student loan refinancing allows you to change the conditions of your repayment plan. You could negotiate for a shorter term with higher payments, which reduces your interest.
Consolidating gathers up debt from multiple sources and simplifies it into one monthly payment. Consolidated plans often allow you to make lower monthly payments, but they extend the length of your student debt. You could also get a lower interest rate from this choice. However, be ready to pay some fees if you make this decision.
How We Chose the Best Student Loans
Federal student loans are the best place to start your search. They offer benefits like reduced interest and possible student loan forgiveness, but there are drawbacks as well. To provide the most complete list, we compared both federal loans and private lenders.
We picked the private lenders that give you the most student loan options with the least stress. That’s why this list prioritizes competitive student loan interest rates and flexible repayment options as well as reduced fees and special perks.
Every situation is different, so we also picked lenders that can serve a variety of students and parents. Finding the best loan for you depends on thorough research and careful comparison. To make the process simple, we also included loan marketplaces.
Find the Right Student Loans for You
Furthering your education is an admirable goal that will help you find success, but it can be a huge expense. Don’t let the burden of paying for school hold you back. You have many options available to you! Keep researching the best student loans, and start investing in your future now.
