The GoodCall.com Team
For the 43 million Americans with student loan debt, government and private student loans were a must-have in order to afford higher education. Student loans provide you with the funds necessary to take classes without worrying about where you’ll get the money. They allow you to focus on your studies rather than squeezing in a […]
BY The GoodCall.com Team
For the 43 million Americans with student loan debt, government and private student loans were a must-have in order to afford higher education. Student loans provide you with the funds necessary to take classes without worrying about where you’ll get the money. They allow you to focus on your studies rather than squeezing in a job or pinching pennies to get through the day.
Before applying for financial aid, it’s important to do proper research to select a loan that aligns with your needs and goals. The best student loans will offer a winning combo of accessibility and affordability: available to students of your age, income level, and aspirations, and at costs that you can manage while you’re in school and after you’ve graduated.
Government student loans are funded by the federal government and offer a host of benefits. In addition to low, fixed interest rates, subsidized loans are issued based on a student’s financial need. If you qualify, you won’t pay interest on the loan while you’re in school or during the grace period after graduating. Whichever federal loan you eventually choose, you’ll find that they’re generally flexible when it comes to making payments, allowing for repayment terms based on your income and even changes to the repayment terms once you’ve received a disbursement. You can obtain a government student loan without a credit check and without the need for a cosigner, which is extremely helpful for younger students who may not yet have a solid credit history.
While government loans have a lot going for them, there are some downsides, too. If you don’t qualify for a subsidized loan, you won’t enjoy the savings and convenience that come with deferred interest and payments. Government debt will also stick with you for life; you can’t discharge government student loans when you file for bankruptcy, so no matter what financial hardships you may face in life, you’ll always be on the hook for your loan.
Private institutions, such as banks, credit unions, schools, and other lenders, administer private student loans. These types of loans work just like credit you may use for other personal expenditures, such as a car or home purchase. As such, you’ll typically see higher interest rates, the need for credit checks, and minimum income requirements. If you’re a full-time student or otherwise don’t have a job, you’ll need a cosigner to qualify for a loan. For these reasons, it’s generally advised that applicants first try for government student loans and then fill any remaining gaps with private ones.
However, private student loans don’t come without perks. For example, you might snag a good interest rate — maybe even better than government loan rates — if you have a good credit rating. Private student loans, like other personal loans, can also be discharged during bankruptcy, so you won’t have to live with that debt forever if you run into severe financial troubles.
As you learn about financial aid, you’ll see a lot of terminology relating to student loan interest rates and what it takes to qualify for a loan. Here are some of the most important.
|Lender||Best for||Fixed APR||Variable APR||Minimum Credit Score|
|Ascent||Good credit or cosigner||3.22-12.54%||4.21-13.12%||600|
|Federal Unsubsidized Student Loan||Graduate students||4.53-7.08%||N/A||N/A|
|Federal Subsidized Student Loan||Low income||4.53%||N/A||N/A|
|MPOWER Financing||International Students||7.52-14.98%||N/A||N/A|
|Sofi||Low cost/No fees||4.73-11.46%||3.09-11.56%|| Undisclosed|
*As of 12/30/2019
The five lending options below are among the best student loan options. In addition to low interest rates, you’ll also save by skipping fees, earning rewards, and deferring payment.
Ascent offers competitive student loan interest rates whether you’re applying alone or with a cosigner. You can also save money with its low minimum repayment of $25 per month, monthly scholarships, and cashback rewards.
Discover’s wide range of private student loans can help whether you’re an undergrad or graduate student, and there are even options for law and medical students. You won’t pay application, late payment, or origination fees, and if you maintain a 3.0 GPA, you’ll earn a cash reward. Interest rates start at 2.95% if you select a variable rate.
A private student loan from Earnest will cover up to 100% of the cost of attending school, and interest rates start at just 2.74%. Its flexible options include loans for independent students as well as those that need a cosigner. Other perks include an autopay discount and a nine-month grace period after you graduate.
A subsidized government student loan is a smart and affordable option for undergraduate students. Because interest rates are based on financial need and are fixed, you’ll enjoy low costs and predictable payment terms. You’ll also avoid interest charges while you’re in school, and you don’t need good credit or a cosigner to apply.
Sofi’s 100% online application process takes just minutes to complete. It offers low costs thanks to fair interest rates and no origination or late fees. Unlike other lenders that place a lot of emphasis on credit scores, Sofi looks at you as a whole to determine eligibility.
Researching the best student loans will help you save as you pursue higher education. Government and private student loans are available for most applicants, and you may find that you’ll need a combination of the two to fully finance your schooling. Educating yourself about student loan interest rates, fees, and eligibility requirements puts you in the best position to choose the right product.
Full list of loans researched: