Studying for college has become a huge financial undertaking. Students need to be aware of which student loans are the best options and how these programs work in order to make sound borrowing choices. With so many different types of loan companies, it’s difficult to understand what they offer and whether or not this is an option that works with your specific situation.
This article will go over 10 top student loan companies including their pros and cons, eligibility requirements, the application process, and more.
What do they look for in a student loan?
When it comes to finding the right student loan, there are a few things that servicers look for. The most important is whether or not you have a good credit score. This means your debt-to-income ratio is low and you’re likely to be able to pay back your loans on time.
Servicers also look at things like where you go to school and what type of degree you’re earning. Generally, they want students who are attending schools with good reputations and those who are pursuing degrees that will lead to high-paying jobs.
Finally, many servicers offer different products depending on your income and debt levels. For example, Nelnet has loans available for those whose income and debt levels fall below certain thresholds
What are the benefits of federal student loans?
There are many benefits to taking out federal student loans before private loans. For one, the interest rates on federal loans are typically lower than those on private loans. In addition, the repayment options for federal loans are much more flexible than those for private loans. Private lenders offer a few different repayment plans, but they all have one thing in common: you have to start making payments while you’re still in school. Federal student loan borrowers, on the other hand, can wait until they graduate to start making payments. And if they can’t afford their monthly payment, they can always choose an income-based plan that will cap their monthly payment at 10% of their discretionary income.
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Another big benefit of federal student loans is that they come with deferment and forbearance options. This means that students who run into financial trouble can temporarily stop making payments or reduce their monthly payments without penalty. Private lenders do not offer either of these benefits.
Federal student loans are also backed by the government, which means that if a borrower defaults on his or her loan, the government will step in and help repay it. This is not the case with private student loans – if a borrower defaults on a private loan, he or she is responsible for paying back the entire loan amount.
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So, before taking out a private student loan, be sure to compare the interest rates and repayment options. Federal loans are typically a better option than private loans, but each borrower should weigh the pros and cons of both types of loans before making a decision.
The Top 10 Student Loan Companies and What They Offer
1. Ascent Co-signed Student Loan
Ascent is one of the few student loan companies that allow for faster loan repayment due to features such as no cosigner release or enrollment in less than half-time courses.
Borrowers also have access to a payment flexibility feature which allows them to see what they can afford and when they’ll be eligible without a hard credit check.
There are no loan limits for co-signers, with a $200,000 aggregate limit and 5, 7, 10 or 12-year terms available.
Cosigned loans require minimum credit scores, which vary depending on the borrower and cosigner. Ascent borrowers have access to a payment flexibility feature which allows them to see what they can afford and when they’ll be eligible without a hard credit check.
The minimum income requirement is $0.
2. Sallie Mae Private Student Loan
Sallie Mae is one of the top 10 student loan companies and offers a range of services to its borrowers. These include:
5/5 stars as a student loan company.
The minimum credit score needed to apply for this loan is 600, with a 3-year fixed APR and low-interest rates.
Students can enroll in auto debit through Sallie Mae to receive a 0% discount on the interest rate for their first two years of repayment.
With the 25-point interest rate reduction benefit, there is only a fixed or deferred repayment option.
It’s not possible to suspend the rate during forbearance or deferment.
The Fixed and Deferred Repayment Options are higher than the Interest Repayment Option, which means more money will be paid out at the end of the grace/separation period
There is a grace period during which borrowers may make payments before the loan starts to accrue interest.
The advertised variable rate is just the starting range, and it could change over time.
Variable rates are based on the length of the loan term, with longer terms providing lower rates than shorter terms. Most smart options loans come with a 6-month separation period. A Smart Option Loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school.
The company offers both fixed and variable rates for students with different requirements for interest rates and payout periods.
47% fixed APR. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. The variable APR is the best option for borrowers who want to pay back their loans in a shorter period of time.
Sallie Mae has one of the few lenders that allows part-time students to borrow money and receive interest on their education loans. S. co-signer. You’ll get help if you’re struggling with student loan payments by getting free credit score tracking, tutoring, and auto-debit options.
The company doesn’t disclose the lowest rates they offer or whether you qualify without a hard credit check. The typical income of approved borrowers is not disclosed. 80% of the total loan cost and applies to borrowers who enroll in auto debit through Sallie Mae.
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The borrower or cosigner must enroll in auto debit through Sallie Mae to receive a 0.80%. The borrower with $20,000 in prior loans and a 2-year in-school period will pay a 9.47% fixed APR for 27 payments of $25 each along with 179 payments of $119 each.
The borrower may receive a loan term that is less than 10 years when lending at least $50 per month with no interest if the student takes on additional debt
3. Earnest Private Student Loan
Earnest offers a variable interest rate student loan, based on the SOFR. The rate will vary but will never exceed 36%.
This loan is offered through Earnest, which also provides a comparison tool for other lenders to see how their rates stack up against this one
4. College Ave Private Student Loan
College Ave Student Loans offers flexible repayment options, including deferments and forbearance.
All loans are subject to approval and adherence to underwriting guidelines.
Rates shown for College Ave Undergraduate Loans include the monthly autopay discount, which lowers your interest rate as long as you have a valid bank account set up for repayment purposes.
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Variable rates may increase after the consummation of the loan agreement. This is an informational example of how student loans work. The APR for this loan is 7.78%.
The average amount of the monthly payments is $175 a month, with a total amount of payments at $18,266 and a typical loan term of 8 years Interest will never stop accruing on your account while it’s in repayment mode so make sure to keep up with your minimum monthly payment!
The 10-year repayment term helps incoming college students avoid taking on a lot of debt.
Even though this loan has an interest rate lower than the average for federal loans, it still makes 120 monthly payments that total $21,501 over 10 years with no principal repayments at all made in between those months.
5. SoFi Private Student Loan
SoFi is a private student loan provider that offers fixed rates from 3.75-13.30% APR and variable rates from 1-11% APR with autopay options available. SoFi offers fixed rates, flexible repayment options, and low fees.
The company has a 5-star rating for student loans and requires a minimum credit score of 600. SoFi offers a 30% APR with autopay, while PARENT offers a fixed rate. SoFi uses an interest rate index to calculate variable rates which change every month. 95%.
The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account in addition to regular payments.
You will lose your tuition benefit if you do not pay by automatic deduction from a savings or checking account. The variable rates hover around the average APR of 11-12%. Variable rates range from 1.89% to 11-98%, with the average being 11%. SoFi offers no-fee student loans with variable APR and flexible repayment options
6. Custom Choice Loan, Powered by Cognition
Custom Choice Loan is a private student loan that’s powered by Cognition. We offer one of the lowest variable interest rates in the industry, and we’re here to help you get the education you deserve without breaking the bank.
We know that everyone’s financial situation is different, which is why we offer a variety of repayment options to choose from. You can select a plan that fits your needs, and you can always change it later if your circumstances change.
Our loans are not subject to individual approval, so you can rest assured knowing that we’re here for you. Terms, conditions, and rates are subject to change at any time without notice- so be sure to check back often!
7. Education Loan Finance Private Student Loan
Education Loan Finance is one of the best student loan companies for students seeking private loans or federal loans with low-interest rates and deferment options. The company has a Fixed APR of 3.20-11.99% and a Variable APR of 1.30-11.52%.
Education Loan Finance also offers a cosigner release option after 48 consecutive on-time payments have been made, which is beneficial for those who may want to remove their cosigner from the loan at some point during the repayment process.
You can see what rate you’ll qualify for without a hard credit check but must have a credit score of at least 700 or a co-signer that has a score of at least 600 to get approved. The lender offers its services through an assigned student loan advisor and will make sure you are eligible for the loan based on your total cost of attendance, not just your income, so you don’t need to worry about qualifications like some lenders require. There are no requirements for term length but it does offer 5, 7, 10 and 15-year terms with lower interest rates than competitors due to the qualifications above (minimum income).
8. Funding U Private Student Loan
Funding U is a private student loan lender that offers loans to all undergraduate students in the United States. The company does not require a cosigner and will approve loan applications regardless of grade level or credit history. Funding U is also open to graduate students, but only those who have completed their first year of college studies.
The United States Student Loan Company offers student loans for college students. This company has $3,000 to $15,000 in loan amounts per year, depending on the number of credits taken and the GPA of the applicant.
The interest rate is fixed from 7.49% to 12.99%. You must make $20 minimum monthly payments or interest-only payments for up to 51 months. Loan repayment begins six months after graduation, which is usually around 6 years in school.
Funding U only lends money to residents of certain states; this list of states is not exhaustive. You must live in one of the 10 states listed here on our website if you want to apply for a Funding U student loan today.
9. LendKey Private Student Loan
LendKey is a private student loan company that partners with community banks and credit unions. Their forbearance period is longer than many lenders offer, with a minimum of 18 months. LendKey also offers variable APRs that are lower than most other companies in the industry.
However, these companies usually require a credit check and have a minimum income requirement. They offer loans up to the cost of attendance minus other aid received but encourage students to apply for federal student loans first as they don’t require co-signers and do not have restrictions on where you attend school.
10. MPOWER Private Student Loan
MPOWER does not accept borrowers with a low credit score. If you have a credit score of 650 or higher, you could be eligible for one of MPOWER’s private student loans.
The company offers low fixed and variable APR options for international students, DACA students, and those without a credit score. This makes it an ideal choice for those who are struggling to find a lender that will work with them because of their unique situation.
MPOWER is one of the few lenders that offer non-co-signed student loans specifically designed for international and DACA students. The company also gives borrowers a dedicated loan advisor to help them through the application process with more speed and efficiency.
Forbearance of 24 months is longer than many lenders offer, so borrowers can get extra time to pay off their loans without any trouble at all. MPOWER’s repayment term is 10 years, which makes it difficult for those who are in school or have just graduated to repay their loan sooner than they had planned on doing because they don’t have much extra time after graduation or before starting work/school again.
However, Ascent offers 10-year terms so this may not be an issue for everyone. Variable rates are available from Ascent.
How to maximize federal financial aid
Federal student loan limits
Federal student loans have limits on the amount that can be borrowed. The government sets these limits, which vary depending on the level of education and year in school. For instance, direct loans are offered to students who meet the financial need guidelines.
These loans are not just for undergraduate students, but also for graduates and the parents of undergraduates. The government covers interest during the grace period on subsidized loans. Unsubsidized loans accruing interest right away is a downside of unsubsidized federal loans; however, there are benefits to federal student loans such as low-interest rates, fixed rates, income-driven repayment options, and no credit check and a free application process.
Lenders offer different terms and conditions; online pre-qualification is available for all lenders, but varies by lender. Private lenders may also offer more money than what is available through federal loan programs; however, there are caps on how much additional money can be borrowed from private lenders when combined with federal funds.
Private student loan amounts
Many students need a cosigner to qualify for federal financial aid. Once you have qualified, you can borrow as much as you need to pay for school.
The amount of money you are able to borrow from a private lender depends on your credit score and the cosigner’s credit score. Private lenders will usually deduct any financial aid received before covering the remaining cost of attendance.
Private loans often have lower interest rates than federal loans.
One downside to private loans is that they do not have origination fees. This means that if you take out a loan from a private lender, the total cost of borrowing will be less than if you took out a loan from the government.
However, private loans cannot be used for expenses beyond tuition and books like federal loans can be. Private loans also require a co-signer of which the loan can be released after on-time payments are made.
The amount of interest you pay will depend on your credit history and that of your cosigner. If both your credit scores are high, then you may end up paying less in interest than with federal loans. However, if either your or your cosigners’ credit score is low, then the interest rate could be quite high. Private loans cannot be consolidated except in extreme circumstances, which can make it difficult to repay the loan over time.