Best Private Student Loans
College tuition costs have skyrocketed in recent decades and students today can expect to pay much more than their parents and their grandparents did to earn a degree. In fact, the price of a college education has risen so fast it even leaves medical care inflation rates in its shadow. On top of this, a four year degree is not only expected of people who want lucrative careers, but it is the bare minimum. Attending graduate school seems to be more and more essential in many fields of study.
So many students need a degree and at astronomical costs, they can hardly afford it on their own. That is why finding a quality student loan is an important step in paying for higher education. Unfortunately, student loans often leave you with debt for years to come.
It is vital to do your research when shopping for your loan. Be smart and choose a loan that you can realistically pay off and borrow only what you absolutely need.
Best Student Loans: What to Consider
In order to properly shop around for a quality student loan, you should keep the most important questions and features in mind.
- Are federal student loans an option for you? These are generally one of the safest bets for students in relation to the typical bank loans. A subsidized Stafford Loan is very affordable and the interest rates do not fluctuate. Plus, the government pays your interest while you are attending school, as long as you have at least a half-time attendance schedule. To qualify you need to have an income that would reflect financial need and the qualifications required by FAFSA.
- Your school may recommend a lender but you shouldn't borrow blindly. Find out the reason behind the recommendation. Even if the lender has special offers for your university, investigate them first.
- READ the fine print. Don't let hidden fees let a seemingly good deal turn sour. Always ask to see the final terms of your loan before you sign up. If a lender isn't forthcoming, don't borrow. Cancellation processes are difficult and costly.
- Find a fair interest rate and ask how much it will go up or down. Ask how much typical interest rates have risen in the past.
- Loans with low interest rates often come with an armada of fees behind them. Look at the APRs between providers for accurate comparisons.
- Make sure you know where your loan actually comes from. Sometimes an organization simply handles a loan that comes from somewhere else.
Best Places for Student Loans
Sallie Mae Student Loans Review
- Offers undergraduate, graduate loans and loans for parents
- Offers both federal and direct loans
- Flexible payment options
- Decent customer service
- Information is secure behind their site's encryption
- No email contact on the site
- Not BBB accredited
Sallie Mae bridges the gap between federal and private providers because they offer both federal loans and direct loans. It is one of the biggest and most well-known student loan providers, possibly because of its range of loan types and features. Unlike most loans with a government affiliation, Sallie Mae offers graduate loans as well as undergraduate and parent loans.
Sallie Mae offers helpful resources and has a general reputation for fair business practices despite the fact that it is not accredited be the Better Business Bureau. Sallie Mae prides itself on its high ethical standard according to company CEO and board member Raymond J. Quinlan who says, "I am proud of our dedication to doing business the right way."
Sallie Mae offers several helpful resources on its website including convenient payment options. You can set up monthly payments or even direct withdrawal payments which can help avoid accidental default. The site also offers financial literacy and research tools that are centered on helping students make sound financial choices. They even have a student loan repayment calculator that helps you determine what you can expect to pay month to month.
On sites like ConsumerAffairs.com, people who have had bad experiences with Sallie Mae site high interest rates and difficult interactions with customer service representatives. Although, they have generally decent customer service, they do not offer a customer relations email address. On the other hand, you can reach them by phone.
Aside from loans, the company offers resources to help save and plan for college.
They claim variable interest rates from 2.25% APR to 9.37% APR but you should always ask if there is a limit to how high variable rates can go.
Verdict - Superb
Sallie Mae is one of the top student loan providers in the industry, and the company is focused on every aspect of paying for college. They are definitely worth looking into.
Nelnet Student Loans Review
- Very informative site
- Offers undergraduate, graduate and loans to parents
- Offers loan consolidation
- Assists consumers with federal loans
- Good payment options
- Some consumers claim unexpected payment rises
Nelnet is another top student loan provider that has several handy features. It's essential to do the proper amount of research when you are searching for a quality student loan and Nelnet offers comprehensive information and tools on their site so you can do just that. When you look into them as a potential provider, they will help you find all the information you need. There are answers to important questions right on the home page plus payment postponement options, repayment options and how to potentially lower your payment.
There are financial fitness resources, like budgeting worksheets, money management guides and identity theft prevention. This is one of the most helpful sites in the industry in terms of informational resources.
Customer service is another one of Nelnet's strengths; their comprehensive FAQ section as well as phone and email support.
Nelnet's interest rates are generally around 6.00% APR but again, ask how high interest rates can possibly go to avoid surprises. Some consumer reviewers said that they experienced unexpected rate increases.
Verdict - Great
Nelnet is another strong choice for private student loans with their straight forward and informational website and their helpful tools. It is worth investigating further, but be sure to ask about any fees and rate limits they might have.
- Clear and informative website
- Offers undergraduate and graduate loans
- Offers parent loans
- Has both private and federal loans
- No loan consolidation
- Loans come from large bank
The fact that StudentLoans.com is backed by Citibank is both a good and bad thing. It's good because you get to work with a large, organized business that offers every feature you could want (except for consolidation), but for the same reason, student loans may not be this big bank's number one priority. When you work with an organization like Sallie Mae, you are working with a company that is primarily focused on student loans; for a bank it is just one of many functions.
That being said, Citibank's StudentLoans.com seems to be one of the best bank student loan services out there. It has one of the most clear and informative student loan sites. Among this surplus of information is additional content on loan education, parent oriented articles, college planning tools, helpful calculators and plenty of information about how to manage your money wisely while in school. Any college student would benefit from checking out this site if only for the helpful and informative content.
With StudentLoan.com you can set up automatic payments, pay online or by phone. You can even make payments with a credit card or a PayPal account.
Verdict - Very Good
StudentLoan.com's excellent website makes it a great resource for college students and their parents. Their big bank nature gives them the ability to offer many resources but also means they have the potential to dilute their focus on your loan.
NextStudent Student Loans Review
- Offers undergraduate and graduate loans
- Has loan consolidation help
- Offers federal loan assistance
- Good customer service
- Limited information on the site
- APR interest rates not mentioned on their site
- Seems to focus a lot on consolidation
NextStudent has a variety of helpful features that make your experience with them easier. Their website is secure, so you can rest assured that your information is safe. They also have payment calculators that allow you to figure out how much each payment will be. One notable feature is NextStudent's Scholarship Search tool, which can connect you to all kinds of scholarship opportunities that you qualify for, in order to alleviate the costs of college.
NextStudent offers all of the loan types that are common in the private student loan industry including graduate and undergraduate loans, but there are no indications that parent loans are available. Like some other to lenders, NextStudent also offers loan consolidation.
As far as payment options, NextStudent conveniently allows students to pay online but beyond that payment options are unclear. Unlike other top lenders, there is no mention as to whether you can set up automatic payments or if you can make payments by phone.
APR rates are also difficult to determine based on the information on NextStudent.com alone. Much of the site seems to be devoted to getting visitors to sign up for loan consolidation and very little information is offered aside from that. If you want to get all of the important pre-loan questions answered, you will not be able to rely on this website alone.
NextStudent is accredited by the BBB but it has no rating at this point.
Verdict - Good
NextStudent offers most of the great features that a quality student loan provider should but their site's lack of informational depth makes them more difficult to access.
Citizens Bank Student Loans Review
- Informative Site
- Offers graduate and under graduate loans
- Offers parent loans
- No Loan Consolidation
- Loans come from large bank
Another large bank that is worth mentioning is Citizen's bank. Their site is clear and easy to understand but unlike Citibank's StudentLoan.com, they do not have a separate site devoted to student loans. However, the site is securely encrypted and offers a range of helpful information and features.
Citizen's offers most of the loans that are standard in the industry including graduate and undergraduate loans, as well as parent loans. You can also receive assistance with your federal loans.
There are several payment options, including the convenience of auto pay enrollment and online payments.
Banks are typically less focused on student loans compared to a company like Sallie Mae who is completely devoted to this area of business. However, it doesn't necessarily mean you will encounter poor service.
Another drawback to this company is their lack of loan consolidation which seems to be common among banks in the industry.
Verdict - Good
Citizen's bank is a competitive option and is worth checking out. It is not the most obvious option but it is worth looking into if you can get a good rate on your loan. Remember to always ask about APR and how much it can fluctuate during your loan's term before you sign up.
Best Private Student Loans Recap
Be smart when shopping for a student loan. Don't rush into anything even if a lender or your school pressures you to borrow before you've taken a deep look at your options. If you borrow the bare minimum and create a plan to efficiently use and pay off your student loan you can earn your degree and avoid years of excessive debt.
Best Student Loans FAQs
What is the difference between a federal loan and a private loan?
Student loan funding is split between federal and private loans. Federal loans are those that are regulated and supported by the US Government through its various agencies. Most federal loans have limitations as to how much a student or the student's parents can borrow; however, they also have the most flexible repayment options after graduation. Private loans are provided directly from lending companies like banks. These typically offer higher borrowing limits based on a cosigner's financials; however, they have much more stringent repayment terms once you graduate.
What is the difference between a subsidized loan and an unsubsidized loan?
You will see these terms when you come across federal loans and the difference is when the interest rate clock starts running. With a subsidized loan, the federal government pays the interest for you while you are still in school, so all of the loans that you borrowed while in school were not accruing interest over that period of time. If you have an unsubsidized loan, then the interest that you will be charged on your borrowings starts to accrue the day you borrow the money. You do not have to pay this interest while you are in school; however, when you graduate, you will see that the amount of loans that you borrowed will be higher than you thought and the difference is the accrued interest on the unsubsidized loans.