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 = Citizens Disclaimer.
2 = CollegeAve Autopay Disclaimer: All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
* 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.
3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
|3.54% - 12.07%2||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|4.11% - 12.19%||Undergraduate and Graduate||Visit Ascent|
|4.00% - 11.85%*3||Undergraduate and Graduate||Visit SallieMae|
|2.93% - 9.67%||Undergraduate, Graduate, and Parents||Visit CommonBond|
|3.80% - 11.99%1||Undergraduate, Graduate, and Parents||Visit Citizens|
|4.53% - 9.69%||Undergraduate and Graduate||Visit LendKey|