Hanneh Bareham specializes in everything related to personal and student loans and helping you finance your next endeavor. She aims to help others reach their collegiate and financial goals through making loans easier to understand.
Edited by
Aylea WilkinsLoans Editor, Former Insurance Editor
Aylea Wilkins is an editor specializing in student loans. She has previously worked for Bankrate editing content about personal and home equity loans and auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editoral integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.
Bankrate's ranking of the best student loan lenders analyzes interest rates, terms and features to help you start your search. It's also a resource for how to decide which student loan is best for you and what to know before applying.
A student loan is a type of borrowed money designed to cover the costs of college tuition, fees, books, supplies, housing and more. There is currently more than $1.7 trillion in outstanding student loan debt in the United States, held by 42 million borrowers. Even though it's a common form of debt, choosing the right loan for your needs is a big decision.
Students can choose either federal or private student loans to help pay for school. It's usually best to start with federal student loans, which have an interest rate of 4.99 percent for undergraduate students for the 2022-23 school year. However, while private student loans have fewer borrower protections, they can fill in any funding gaps and typically have a wider range of repayment terms. Private student loan rates typically range anywhere from 3 percent to 15 percent.
If you are planning on taking out federal student loans, mark your calendar — the Free Application for Federal Student Aid (FAFSA) for 2023-24 opened on Oct. 1 and closes June 30, 2024. It's the only way to access federal aid, which is first-come, first-serve, so it's best to apply as soon as possible.
1
Fill out the FAFSA.
The Free Application for Federal Student Aid opens on Oct. 1 each year and will tell you your options for federal student loans.
2
Get prequalified with private lenders.
Prequalifying with private lenders lets you see your interest rate and terms without a hard credit pull.
3
Submit an application.
Once you've chosen a lender, you'll send in a formal application online, over the phone or in person. You'll need to provide income verification documents, and you'll go through a hard credit check.
4
Sign loan documents.
After being approved by a lender, you'll sign your loan documents to finalize the transaction. Your student loan funds will be sent directly to your school.
1
Look at federal student loan options.
With low rates and many options for payment assistance, federal loans are the best choice for most borrowers.
2
Compare offers from a few private lenders.
If you need funding from private loans, a good rule of thumb is to get prequalified with at least three lenders to compare rates.
3
Consider interest rates and terms.
With offers in hand, look at which interest rate and repayment term works best for your budget. Also consider any additional fees from the lenders.
4
Look into unique features.
If a lender offers a long grace period or deferment options while you return to school, it may be worth it to choose that lender over one with a slightly lower interest rate.
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Answer a few questions in two minutes or less to see which student loans you pre-qualify for. It's free and will not impact your credit score.
The Bankrate scoring system evaluates lenders' affordability, availability and customer experience based on 11 data points selected by our editorial team.
An annual percentage rate (APR) represents the interest and fees you'll pay on top of your initial amount every month. A fixed rate will not change during your repayment period.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
4.0
Bankrate Score
Fixed APR From
4.47-
8.99%
with AutoPay
Loan Amount
$25k–$500k
Term: 5-25 yr
Min. Credit
660
Low rates for loans over $5000
No Maximum loan amount
See your rates in 3 minutes without affecting your credit score
No application or origination fees and no prepayment penalties
Friendly customer service available via phone, email, and live chat
See disclaimers at: https://www.splashfinancial.com/disclaimers/
Splash Financial, Inc. (NMLS #1630038), licensed by the DFPI under California Financing Law, license # 60DBO-102545
* Fixed loans feature repayment terms of 5 to 20 years. For example, the monthly payment for a sample $10,000 with an APR of 5.47% for a 12-year term would be $94.86. Variable loans feature repayment terms of 5 to 25 years. For example, the monthly payment for a sample $10,000 with an APR of 5.90% for a 15-year term would be $83.85.
** To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
General Disclosure
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Products may not be available in all states. Rates and terms are subject to change at any point prior to application submission. The information you provide is an inquiry to determine whether Splash’s lending partners can make you a loan offer. To qualify, a borrower must be a U.S. citizen or other eligible status and meet lender underwriting requirements. Lowest rates are reserved for the highest qualified borrowers and may require an autopay discount of 0.25%. Splash does not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, creditworthiness, income and other factors. This information is current as of March 2, 2023. You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income-based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Fixed APR: Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rate options range from 4.47% (with autopay) to 9.24% (without autopay).
Variable APR: Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 4.59% (with autopay) to 9.24% (without autopay). Variable rates are derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001).
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4.1
Bankrate Score
Fixed APR From
3.95-
11.87%
with AutoPay
Loan Amount
$5k–$500k
Term: 5-20 yr
Min. Credit
660
Compare real, pre-qualified rates from up to 10 lenders in under 2 minutes
No hidden fees, origination fees or prepayment penalties
Checking your rates won't affect your credit score
Variable rates will fluctuate over the term of the borrower's loan with changes in the LIBOR rate. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Rates are subject to change at any time without notice. Your actual rate may be different from the rates advertised and/or shown above and will be based on factors such as the term of your loan, your financial history (including your cosigner’s (if any) financial history) and the degree you are in the process of achieving or have achieved. While not always the case, lower rates typically require creditworthy applicants with creditworthy co-signers, graduate degrees, and shorter repayment terms (terms vary by lender and can range from 5-20 years) and include loyalty and Automatic Payment discounts, where applicable. Loyalty and Automatic Payment discount requirements as well as Lender terms and conditions will vary by lender and therefore, reading each lender’s disclosures is important. Additionally, lenders may have loan minimum and maximum requirements, degree requirements, educational institution requirements, citizenship and residency requirements as well as other lender-specific requirements.
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4.0
Bankrate Score
Fixed APR From
4.49-
10.68%
with AutoPay
Loan Amount
$5k–$300k
Term: 5-20 yr
Min. Credit
660
2-Minute rate check with no impact on your credit score
No origination fees or prepayment penalties
Network of 300+ community lenders means higher chances for approval and lower rates
Available for private and federal, undergraduate and grad school student loans
0.25% Interest Rate Reduction with automatic payments
One of the largest unemployment protection offers in the market; up to 18 months
Cosigner release available after 12 monthly payments
Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile, and it may be based on your credit score, level of degree earned, and the availability and credit score of a cosigner applicant. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Variable rates may increase after consummation. Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if your meet the lender's eligibility criteria. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
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4.7
Bankrate Score
Fixed APR From
4.99-
8.99%
with AutoPay
Loan Amount
$1k–$500k
Term: 5-20 yr
Min. Credit
650
Easy online application!
No origination fees, late fees, and no insufficient fund fees. Period
Flexible repayment options to help you find the right loan for you
0.25% discount when you set up autopay*
0.125% discount for returning borrowers and families with multiple children in college
Fixed rates range from 4.74% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. 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. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
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4.5
Bankrate Score
Fixed APR From
4.96-
8.99%
with AutoPay
Loan Amount
$5k–$500k
Term: 5-20 yr
Min. Credit
680
Lower rates based on your future potential and full financial profile, not just your FICO score
Flexible terms that let you pick your exact monthly payment
Lifetime service provided in-house. Unlike other lenders, we will never pass you off to third-party servicers
No fees for origination, prepayment, or loan disbursement
Two-minute rate check with no obligation at www.earnest.com
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 9.13% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.21%. For loan terms over 15 years, the interest rate will never exceed 9.24%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
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Fixed APR From
4.59-
8.99%
with AutoPay
Loan Amount
$5k–$500k
Term: 5-20 yr
Min. Credit
680
You can refinance without a degree
Three minutes to get your rate with our quick and easy online application
No fees, including no application, prepayment, or late fees1
Customize loan terms, from 5 to 20 years to fit your budget and financial goals
Student or Parent PLUS Loan refinancing available
You can choose between fixed and variable rates. Fixed interest rates are 4.84% - 9.24% APR (4.59% - 8.99% APR with Auto Pay discount). Starting variable interest rates are 5.24% - 9.19% APR (4.99% - 8.94% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.
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4.0
Bankrate Score
Fixed APR From
5.39-
11.87%
with AutoPay
Loan Amount
$10k–$750k
Term: 5-20 yr
Min. Credit
620
You can see if you'll qualify and what rate you'll get without a hard credit check
You can refinance Federal PLUS Loans in your name
Loyalty discount: Borrowers with a Citizens account when they apply get an additional 0.25% interest rate discount
Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of March 1, 2023, the 30-day average SOFR index is 4.52%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
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4.2
Bankrate Score
Fixed APR From
5.08-
8.04%
Loan Amount
$10k–$500k
Term: 5-20 yr
Min. Credit
680
Prequalify to estimate rate without affecting your credit score
Submit online application in minutes
No application fees, origination fees, and prepayment penalty
Flexible repayment terms to fit your needs and goals
Student Loan Advisor to guide you through the application process
Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 06-24-2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner's (if any) financial history. See Eligibility Requirements for more information. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.
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The Bankrate guide to choosing the best student loans
When shopping for a student loan, look for a competitive interest rate, flexible repayment terms that meet your needs, generous hardship options and minimal fees. Loan details presented here are current as of Feb. 10, 2023. Check the lenders’ websites for any updates.
The top lenders listed below are selected based on factors such as APR, loan amounts, fees, credit requirements and broad availability. To learn more, read our methodology section at the bottom of the page. Below, you can also find information about when to choose federal or private loans, how to find a competitive interest rate and how to compare lenders to find the best deal for your circumstances. You can also prequalify with the private lenders recommended on this page.
What are current student loan interest rates?
Current interest rates on private student loans vary based on where the loan originates, the type of interest rate and the creditworthiness of the borrower. Federal student loans, aside from Perkins loans, disbursed after July 1, 2006 have fixed rates. The interest rates shown for these types of loans apply to those disbursed between July 1, 2022 and Aug. 31, 2023.
LOAN TYPE
FIXED APR
Direct Subsidized and Unsubsidized Loans (undergraduate borrowers)
4.99%
Direct Unsubsidized Loans (graduate and professional borrowers)
6.54%
Direct PLUS Loans (parents and graduate and professional borrowers)
7.54%
What are interest rates for federal student loans?
Federal student loan rates change each year. Your rate depends on when you took out your loan.
LOAN FIRST DISBURSED
UNDERGRADUATE DIRECT SUBSIDIZED LOANS
UNDERGRADUATE DIRECT UNSUBSIDIZED LOANS
GRADUATE OR PROFESSIONAL DIRECT UNSUBSIDIZED LOANS
Overview:Ascent offers undergraduate and graduate private student loans in all 50 states. Borrowers without a co-signer have their own loan option, which is a rarity in the private student loan space. If you don’t have a co-signer, you may be able to qualify for a loan based on your school, graduation date, major and cost of attendance. The lender also offers a longer-than-average period of forbearance, which is a hardship program that allows you to temporarily stop making payments.
Why Ascent is best for students without a co-signer: Ascent is one of the only lenders to give undergraduates the chance to qualify for a student loan based on future income rather than credit score, removing the need for a co-signer.
Pros
Loan option based on future income instead of credit score.
Forbearance of up to 24 months over the life of the loan.
Grace period of nine to 36 months, depending on degree type.
Cons
High rate caps.
Undergraduate borrowers without a co-signer must have a GPA of at least 2.9.
Undisclosed credit requirements for credit-based loans.
Requirements: Borrowers must be a U.S. citizen or have a co-signer who is a U.S. citizen or permanent resident. For some loans, students must be enrolled full time, have at least two years of credit history, have a minimum annual income of $24,000 and maintain a GPA of at least 2.9.
Overview: Citizens Bank offers private student loans to undergraduate students, graduate students and parents. Citizens Bank will run a hard credit inquiry when you apply and will let you know if you qualify for the multiyear loan program. If approved, you can request funds in subsequent years without supplying additional income documentation or going through hard credit checks, so the process is faster.
Why Citizens Bank is best for multiyear approval: Borrowers can get approved for multiple years of student loans without needing to go through a hard credit check every time, which is convenient if you know that you'll need funding every year.
Pros
Multiyear loan option.
0.25 percent APR discount for eligible Citizens Bank accounts.
Scholarship opportunities available.
Cons
$150,000 limit for undergraduate loans.
No firm deferment or forbearance policies.
Requirements: Borrowers must be a U.S. citizen or permanent resident. Eligible noncitizens must apply with a co-signer who is a U.S. citizen or permanent resident. Borrowers must also be enrolled at least half time, have no prior student loan defaults and be the age of majority; younger borrowers must apply with a co-signer. Citizens Bank states that applicants must have creditworthy, though it doesn't specify a minimum credit score.
Fees: Citizens Bank charges a late fee of 5 percent and a returned payment fee of $15.
Overview:College Ave is an online lender that offers private student loans to undergraduate students, graduate students, parents and students attending community college and career programs.
Why College Ave is best for a quick application process: College Ave has a simple online application that only takes a few minutes to complete, and borrowers can accept terms and e-sign documents immediately after approval.
Pros
Three-minute application process.
Loans available for community college and career programs.
$150 reward upon graduation.
Cons
Loan cap of $150,000 for most graduate school loans.
Limited eligibility information.
Co-signer cannot be released until at least half of the repayment period has elapsed.
Requirements: Borrowers must be a U.S. citizen or permanent resident and be making satisfactory academic progress at their school. International students with a Social Security number may apply with a qualified co-signer. Students may be enrolled full time, half time or less than half time.
Overview:Earnest is an online lender that funds private student loans to undergraduate and graduate students and offers unique repayment options. Earnest's grace period is nine months long, which is three months longer than what most lenders offer. Borrowers are also allowed to skip one payment every 12 months.
Why Earnest is best for flexible repayment terms: Borrowers can pick their loan term, which ranges between five and 20 years. Plus, once every 12 months, borrowers can choose to postpone a payment.
Pros
Skip a payment once every 12 months.
Nine-month grace period.
Extremely low starting rates.
Cons
No student loans available in Nevada.
No co-signer release.
Credit score of 650 and $35,000 minimum income required.
Requirements: Borrowers must be attending or enrolled to attend an eligible four-year Title IV institution. Undergraduate borrowers must be enrolled at least half time. Borrowers must also be the age of majority in their state and be a U.S. citizen or permanent resident, or have a co-signer who is the age of majority and a U.S. citizen or permanent resident. Borrowers or co-signers must have at least three years of good credit history, no history of bankruptcy, a minimum annual income of $35,000 and a minimum credit score of 650.
Fees: Earnest charges a returned payment fee of up to $8. Florida residents may be charged a stamp tax of 0.35 percent.
Overview: Sallie Mae offers private student loans to undergraduate students, graduate students, parents and students enrolled in career-training programs.
Why Sallie Mae is best for part-time students: Sallie Mae is one of the only private student loan lenders that doesn’t require borrowers to attend school full- or half time, which makes it a standout option if you’re studying abroad, taking just one or two classes at a time or taking a professional certification course.
Pros
Free quarterly FICO credit score access.
Loans for part-time students, students attending online or summer classes and students studying abroad.
Wide range of loan amounts.
Cons
Few eligibility requirements disclosed.
Only 12 months of forbearance available.
Only one term option for graduate students.
Requirements: Borrowers must be U.S. citizens or permanent residents or have a co-signer who is. Sallie Mae doesn't list many of its eligibility requirements, but it says that it looks at borrowers' history of borrowing money and paying it back on time.
Fees: Sallie Mae charges a late fee of 5 percent or $25, whichever is less. If your payment is returned, you may also be charged up to $20.
Overview: SoFi is an online lender that offers private student loans for undergraduate students, graduate students and parents. Among its perks, SoFi says that it doesn’t charge any fees, which cuts down on the overall cost of borrowing.
Why SoFi is best for no fees: It's standard for lenders to charge late fees or nonsufficient funds fees, but SoFi does away with even these fees. Of course, it's still not a good idea to miss payments, but SoFi's no-fee policy provides a nice buffer.
Pros
Member rate discount of 0.125 percent.
Unemployment assistance.
No fees.
Cons
Vague eligibility requirements.
Loans not available for associate degree programs.
Maximum term length of 15 years.
Requirements: Borrowers must be the age of majority and be a U.S. citizen, permanent resident or visa holder. Borrowers or co-signers must also be employed or have sufficient income. Borrowers must be enrolled at least half time in a degree-granting program.
Fees: SoFi charges no fees.
Types of student loans
Students have several options when it comes to student loans depending on their degree program:
Federal undergraduate loans: U.S. citizens and eligible noncitizens can qualify for federal student loans, regardless of credit score or whether they have a co-signer. Undergraduates may have the option of Direct Unsubsidized Loans or Direct Subsidized Loans, the latter of which is offered only to students with financial need.
Federal graduate loans: Graduate students can qualify for federal Direct Unsubsidized Loans or Direct PLUS Loans. Unsubsidized loans are cheaper, but PLUS Loans have higher loan amounts.
Private undergraduate loans: Borrowers who have taken out the maximum in federal student loans may choose to look for private student loans. In many cases, these loans may also be the only viable option for international students looking to study in the U.S., since these students don't qualify for federal aid.
Student loan refinancing: If you took out a student loan in the past but want to change your repayment term or interest rate, you may choose to refinance. Refinancing pays off your old loans in exchange for a new loan.
Federal vs. private student loans
Federal student loans are offered by the U.S. Department of Education, while private student loans are offered by banks, credit unions and private lenders. It's almost always best to start your search with federal student loans, though private student loans also offer some unique perks.
The biggest difference between federal and private loans is in the rates and eligibility requirements. Private lenders base your rates on your credit score, with a poor credit score leading to higher rates. Federal student loans, on the other hand, offer every borrower the same rate for each type of loan. The average interest rate on a private student loan can range from around 2 percent to 15 percent, while federal loans charge 4.99 percent, 6.54 percent or 7.54 percent, depending on the loan type.
Some federal loans do have borrowing limits, so borrowers will often turn to private lenders to finance their remaining academic costs. However, while private loans can often finance up to the total cost of attendance, they don't offer as many ways to customize your repayment plan.
Most private student loans also don't offer many opportunities for loan forgiveness. Even Biden's now-stalled plan to forgive up to $20,000 in student loan debt only applies to federal debt.
FEDERAL STUDENT LOANS
PRIVATE STUDENT LOANS
Interest rates
4.99% to 7.54% for 2022-23
2.99% to 14.96% fixed, 2.99% to 14.86% variable
Fees
1.057% to 4.228% origination fee
Varies by lender
Borrowing limits
$31,000 total for dependent undergraduates, $57,500 total for independent undergraduates, 100% total cost of attendance for graduates
100% total cost of attendance with many lenders
Qualification requirements
Must be a U.S. citizen or eligible noncitizen and be enrolled at least half time
Varies by lender; often must have good credit and consistent income
Benefits
Income-driven repayment plans, robust deferment and forbearance, no minimum credit score
Low interest rates for good-credit borrowers, often zero fees, lender-specific perks
Drawbacks
Potentially higher interest rates than private loans offer for borrowers with good credit, loan amount caps for undergraduate borrowers
Credit check required, high rate caps, fewer borrower protections
Student loan interest information
The amount you borrow with a student loan is not the only amount you'll have to pay back; interest charges can add significantly to the overall cost of your loan.
How student loan interest works
When you apply for a student loan, you'll be offered an interest rate. This interest rate is an extra percentage of your loan amount that you'll have to pay each month.
With federal loans, this rate is the same for all borrowers and is determined by the federal government each year. With private loans, this rate is determined by your credit score, income and more. The most affordable private student loans go to students in good financial health with high credit scores.
Prospective borrowers can usually choose between a fixed and a variable interest rate. Fixed interest rates remain the same over the life of the loan, while variable rates change based on market trends. Federal student loans are always fixed, while private student loans can be either fixed or variable.
While browsing interest rates, you can calculate your student loan interest to estimate how much you will pay each month. Here's how to do it:
Find your daily interest rate: Divide your annual interest rate by the number of days in a year (365).
Determine your daily interest accrual charge: Multiply your daily interest rate by your principal balance.
Calculate your monthly payment: Multiply your daily interest by the number of days in your billing cycle.
If you have $10,000 in student loans and a 6 percent interest rate, with a 30-day billing cycle, a little over $49 of your first month's payment would go toward interest.
You can also calculate how much interest you'll pay over the life of your student loan by using a student loan calculator.
On Nov. 22, 2022, President Joe Biden announced that the federal student loan payment pause would be extended a final time through June 30, 2023 or until the ongoing student forgiveness litigation is resolved. Payments and interest charges on federal loans will resume 60 days following the end of the pause.
In the a previous announcement, Biden revealed a sweeping student loan forgiveness plan that will cancel up to $10,000 in federal student loan debt for borrowers making less than $125,000 (or $250,000 if married and filing jointly) and $20,000 in federal student loan debt for borrowers who are below that income threshold and also received a Pell Grant for college.
The plan is currently on hold due to ongoing litigation in the Supreme Court. Oral arguments will begin in February and borrowers can expect to know the verdict come late spring/ early summer.
The administration is also proposing several changes to federal student loan programs:
A new income-driven repayment plan that will charge 5 percent of the borrower’s discretionary income. After 10 years, borrowers who originally took out less than $12,000 will have the remaining balance forgiven.
Permanent revisions to Public Service Loan Forgiveness that will broaden the definition of an eligible payment within the program.
There is a great deal of turmoil surrounding President Biden’s debt relief plan, with House Republicans recently proposing a complete block on the plan. However, there has also been significant support for student debt relief.
At least ten briefs have been filed with the Supreme Court in favor of student debt relief, including one submitted by over 20 state Attorney Generals who support the plan. The Department of Education has also released data showing that 26 million people applied for or were automatically eligible for one time student debt relief in the four weeks that the application was open. United States Undersecretary of Education James Kvaal has signaled that if Biden’s plan does not go through, we could see a “historic rise” in student loan delinquency and defaults.
How the Fed rate hikes impact student loans
After raising the federal funds rate seven times in 2022, the Federal Reserve raised rates again at the Federal Open Market Committee’s meetings in February and March. The federal funds target range is now 4.75-5 percent, which is the highest target since 2008. It is likely that the Fed will raise rates at least once more in 2023, likely two more times.
While the Fed decisions won’t impact federal student loans for the 2022-23 school year – those are already set in stone – they could impact new private student loans and refinancing. They also impact the rates on Federal student loans for the 2023-24 school year.
This is especially critical for borrowers who have a private student loan with a variable interest rate, whose loans could start to become more expensive. If you have an existing loan, now might be the time to refinance into a fixed rate. If you’re taking out a new private student loan, it may be wise to choose a fixed rate from the start.
What to know about the FAFSA
The FAFSA is the only way to get federal student loans, which is why all eligible students should fill out the form if they anticipate needing to borrow money for college.
When does the FAFSA open? The FAFSA opens on Oct. 1 every year. For the 2023-24 school year, the FAFSA opened on Oct. 1, 2022.
When is the FAFSA due? The federal deadline for the FAFSA is June 30 for the award year you need funding. For the 2023-24 school year, the FAFSA is due on June 30, 2024. However, some states and colleges have earlier deadlines.
Who is eligible to apply for the FAFSA? U.S. citizens, eligible noncitizens and DACA recipients can fill out the FAFSA. However, only U.S. citizens and eligible noncitizens can receive federal financial aid.
What happens if you make a mistake on your FAFSA? If you've experienced a serious financial event since submitting the FAFSA or your personal details have changed, you are able to update your FAFSA after the fact.
FAQ about student loans
Every lender has different eligibility requirements for student loans, but generally you’ll need to:
Be enrolled at least half-time in an eligible school.
Meet age, education and citizenship requirements.
Use the loan for qualifying education expenses.
Have a good credit score and consistent income (or have a co-signer who does).
Maintain good grades while in school.
Whether or not you need a co-signer for private student loans depends on your financial health. If you have poor credit or little income, a creditworthy co-signer could help you get approved or receive a better interest rate. Some lenders also require co-signers for undergraduate borrowers, regardless of financial health.
You can take out new student loans or refinance your existing loans with bad credit. Most federal student loans don't even check your credit, which makes them a great option for borrowers with little to no credit history. If you are applying for a private student loan, some lenders cater to borrowers with poor credit, although interest rates may be higher and loan amounts smaller.
Before applying for any student loan, check for credit score requirements at each lender and get prequalified if possible.
Private student loans appeal to many borrowers because of their high borrowing limits and low starting interest rates. They also give you the option of fixed or variable rates, so you can choose the best plan for your budget. However, private student loans have fewer deferment and forbearance options than federal student loans, and borrowers with bad credit could see interest rates in the double digits.
Refinancing your student loans may be a good option if you'd like to consolidate multiple loans into a single loan or if interest rates have fallen significantly since you first took out your fixed-rate loan. However, refinancing can only be done through private lenders, so you'll lose options like income-driven repayment programs if you refinance your federal loans.
To refinance your student loans, shop around and compare a few lenders to see which one offers the best rate and repayment terms for your situation, getting prequalified where possible. When you're ready to apply, you can typically apply online, over the phone or in person. Once you're approved and have submitted the necessary documentation, the lender will pay off your existing loans, and you'll begin making your new payments.
In most cases, student loans will stick around until you pay them off in full; they will not disappear after a certain amount of time. The only exceptions are if you qualify for a forgiveness program, such as Public Service Loan Forgiveness, in which case you may not have to pay your full balance.
In general, you cannot use a personal loan to pay for college tuition — lenders strictly prohibit this. However, there are personal loans for students who need to pay for travel expenses, books or equipment, as long as the student has a good credit score. Keep in mind that student loans can cover all of these educational costs, and they're often a better choice than personal loans. However, if you only need to borrow a few hundred dollars, a personal loan is worth considering.
Methodology
To find the best student loans, Bankrate first looked at lenders that have a national reputation and serve borrowers across the U.S. We then narrowed down the field based on APR ranges, loan options and loan amounts to ensure that the lenders offered competitive loans for a variety of borrowers. Lenders that offered loans for undergraduates, MBA students, medical students and more, for example, scored higher than those offering just one type of loan.
To determine the final rankings, we then evaluated eligibility requirements and any standout features that make a loan uniquely suited to a variety of needs — for instance, the ability to apply for multiple years of school or receive cash rewards upon graduation.
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