If you need help paying for college, sometimes grants or scholarships don’t cut it. Although it’s important to avoid debt when possible, seeking out the best student loans can help cover the costs of college that financial aid doesn’t.
You have two options for student loans: federal and private loans. The best student loans for most people will be federal loans, as there are inherent benefits and protections, as well as standardized interest rates and no need for a cosigner.
But there are limits to federal loans and students may need to investigate private loans, too. Since private student loans can be tricky, it’s all the more important that you choose the best private student loans available to you.
Finding private student loan lenders
Before evaluating your options, you need to know where to go. Federal loans are all provided by the government, but private student loans are available through a variety of lenders and financial institutions.
You can get a traditional bank loan through a bank or credit union. You can also visit your school’s financial aid department to learn if getting a private loan directly from the college or university.
Individual states also offer private student loans to residents who attend school within the state. Be aware that these are different than federal loans!
How to identify the best student loans
Once you identify where you can apply for loans, your next step is to evaluate the options. You should compare various loans against each other because different lenders will offer different rates, terms, and benefits. To help you, we’ve listed out four qualities of the best private student loans to guide your search.
1. Low interest rate
The best quality in any private loan will usually be a low rate. Student loan interest rates are what lenders charge you for the ability to borrow money – the lower the rate, the smaller that overall fee will be over time.
Depending on how much you borrow, a low interest rate can save you hundreds or even thousands of dollars as you repay your debt.
Be wary of lenders that advertise a wide range of interest rates on their student loans. A company that offers loans at interest rates ranging anywhere from 5% to 15% is unlikely to actually offer that lowest rate to most borrowers. Unless you have a virtually perfect credit score, don’t expect to qualify for the lowest advertised rate.
2. Fixed interest rate
In addition to looking for the lowest rate, look for private student loans with fixed interest rates.
The majority of private loans come with variable-rate options, which means the amount you’ll pay in interest can and will change. Variable rates are determined by the behavior of the market, which means your monthly payment could rise for factors that are outside your control. Clearly, that’s not ideal.
The best student loans are generally fixed-rate loans, which means the interest payment won’t fluctuate and you’ll pay the same amount each month over the life of your loan.
3. Low or no fees
The interest rate will play a big part in how much borrowing money for school will cost – but it’s not the only expense. Private student loans can come with high application and origination fees. Some loans will even charge prepayment fees if you pay extra or early.
Be sure to compare fees when looking at your options and keep costs as low as possible. And while rare, loans with no application or origination fees do exist. SoFi’s MBA Loan is one example of a private student loan that doesn’t come with any fees.
4. Additional support and perks
The level of customer service you receive after you take out your loan matters! While even the best private student loans won’t qualify for repayment or forgiveness programs offered by the federal government, some lenders do offer similar benefits for borrowers.
Look for loans that offer a deferral period after graduation. Many private student loans do not offer this, so be sure to ask whether or not this is available before you borrow any money. Even if you don’t anticipate having trouble repaying your loan, consider choosing one that offers flexible terms or options for restructuring your monthly payments.
Additionally, seek out lenders that offer support in the form of debt management programs, educational resources like blogs, or dedicated customer service teams.
These benefits will allow you to have more tools at your disposal should you ever need help managing your student loan debt after you graduate. That doesn’t mean you have to plan on using them, but having the support there if you need it will better set you up for success.
How to get the best private student loans
It’s well worth putting in the effort to find the best student loans that you can get, as better terms and lower interest rates will make it easier to manage your debt when it’s time to repay the money you borrowed.
Remember to do some comparison shopping and get quotes for private student loans from more than one lender to evaluate the terms, interest rates, and fees.
Finally, seek out lenders that offer some sort of help for borrowers, such as educational resources to help you understand how to create debt repayment strategies or options for deferring payments and consolidating loans.
You may not take advantage of every benefit available, but having a student loan servicer that wants to support your efforts to repay your debt is critical when taking out a private student loan.
If you’re interested in getting a few quotes from private student loan companies, we’ve handpicked the six best below.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.82% – 12.82%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|3.88% – 12.88%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.04% – 12.01%9||Undergraduate, Graduate, and Parents||Visit Citizens|