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Find the Best Student Loan Companies

by Barbara Friedberg Personal Finance Contributing Editor

Student loans provide access to higher education to those who cannot afford tuition — but they are also a significant responsibility. Use our guide to research the best student loan company for you. We explain what students should look for when they take out federal loans, private loans or both. There are many differences between lenders, including rates and terms, so it is essential to research companies before applying. More than 43 million students and graduates have student loan debt, and that number continues to grow with the high cost of postsecondary education.

Federal vs. private student loans

Students take out loans from the federal government and private sources, like banks and credit unions. Irrespective of whether you take a federal or private student loan, you'll have to return the balance and interest. However, both types come with different options, terms and conditions. It's important to know the differences between these two types of student loans:

Federal student loans

  • Has income-driven repayment plans for some borrowers.
  • No credit check is required for consideration.
  • Repayment plans and terms can be changed.

Private student loans

  • Offer a choice of fixed or variable interest rates.
  • Interest-only and fixed repayment plan options for when you’re in school.
  • Provide flexibility for students and parents.

Find the best private student loans

You can get private student loans from many lenders, and it's easy to find the right lender for you. Here's a breakdown of our top picks by loan type, minimum credit score, APR, approval requirements, availability, customer service and online application:

Our top pick overall

Company nameContact
lendkey logo
  • Minimum score: 660
  • Loan types: Private and student refinancing
  • Variable APR: 2.99% to 7.75%

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LendKey is a consumer banking marketplace platform that connects borrowers with private student loans and refinancing loan options from hundreds of credit unions and local community banks. The loans from LendKey are good for borrowers who prefer to work with these types of financial institutions over a larger bank. It services many types of loans and offers extended forbearance for loans with longer terms. Loans from LendKey are not available for borrowers in these states: Maine, Nevada, North Dakota, Rhode Island and West Virginia.

Our top pick for loan discounts
PNC Student Loans

Company nameContact
pnc logo
  • Minimum score: Not disclosed
  • Loan types: Undergraduate, graduate and student refinancing
  • Variable APR: 1.88% to 11.66%

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PNC's private student loans are an option for students who plan to start repayment while they're still enrolled in their school’s degree program. The company offers immediate and interest-only payment plans, as well as a 0.5% interest rate reduction for automatic payments.

Our top pick for loan availability
Sallie Mae

Company nameContact
sallie mae logo
  • Minimum score: 748
  • Loan types: Multiple education loan options
  • Variable APR: 1.25% to 11.1%

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Sallie Mae is one of the largest providers of private student loans. For borrowers who've struggled to qualify for student loans in other places, Sallie Mae might be an easier option. This lender offers loans for medical school, MBA programs and undergraduate and graduate programs. Additionally, Sallie Mae offers parent loans, which a parent can take out on a student’s behalf.

Our top pick for loan options

Company nameContact
credible logo
  • Minimum score: None
  • Loan types: Direct Subsidized, Direct Unsubsidized and PLUS loans
  • Variable APR: 2.75% to 5.3%

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Credible is not a direct lender. Instead, it's a marketplace for borrowers to compare options for student loans and student loan refinancing. It's a free service and charges no application fees or origination fees for student loans. With over 100 lenders to choose from, borrowers can compare options for both federal and private student loans. Prequalification is determined quickly; all you need is personal information and information about the school you're attending to get started.

Find the best federal student loans

Federal student loans are obtained from the federal government. Here is a breakdown of our top picks by loan type, minimum score, APR, approval requirements, availability, customer service and ease of online application:

Our top pick for loan repayment options
Great Lakes Higher Education Corp.

Company nameContact
great lakes higher education corp logo
  • Minimum score: None
  • Loan types: Direct Subsidized, Direct Unsubsidized, Direct PLUS and Direct Consolidation Loans
  • Variable APR: 2.75% to 5.3%

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Great Lakes Higher Education Corp. is a nonprofit organization that services millions of borrowers. Great Lakes acts as an intermediary between the federal government and borrowers once the loan has entered repayment. The company services federal student loans.

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What is a student loan?

Student loans are loans for educational expenses. They're given with the expectation that the borrower will pay them back. They don't differ much from other types of loans, but there are some attributes associated with student loans in particular. Their interest rates may be lower than with other loan types, and repayment often starts when the borrower leaves school. In the U.S., there are two types of student loans: federal and private loans. Most students obtain a federal student loan first, then seek private loans if funding runs out. Student loans are quite different from scholarships and grants in that they have to be repaid once the student is out of school.

How do student loans work?

Student loans are money borrowed to pay for college. These loans must be paid back to the government if they're federal or to a private lender if they're private. Student loans do accrue interest. These loans are used for tuition, books and other expenses, and borrowers can either apply with a lender for private student loans or the government for federal student loans.

How private student loans work: Banks, credit unions and other organizations provide student loans with lender-specific terms and conditions. They tend to be more expensive than federal student loans, with variable or fixed interest rates. Many require payments while you're still in school. Private student loans require credit checks and accept co-signers.

How federal student loans work: Federal student loans are funded by the federal government and have fixed rates that are often lower than private loans offer. Payments aren’t due until the student graduates, leaves school or changes enrollment status. Credit checks aren't always required, and there are several repayment plan options.

Types of student loans

Types of federal student loans

Federal student loans are funded by the government. They may be included in a financial aid package. Federal loans include Direct Subsidized, Direct Unsubsidized and Direct PLUS loans (for graduate students and students' parents). In general, interest rates and fees are lower for federal student loans than for private student loans.

Federal Direct Subsidized: These loans are meant for undergraduate students with a demonstrated financial need. The government pays interest on this type of loan while the student is in school and enrolled at least half-time. The government also pays the interest during the first six months after you leave school and during a period of deferment.

Federal Direct Unsubsidized: These loans are available to both undergraduate and graduate students; demonstrating financial need isn't necessary. You pay interest on these loans at all times.

Federal Direct PLUS: These loans are available to both graduate students and parents of dependent undergraduate students. The borrower is responsible for the interest payments.

Types of private student loans

Private loan availability is determined by the degree you're obtaining, your nationality and state or credit union requirements. Before settling on one loan, you might want to take a look at this list to see if any options apply:

  • Bar loans: Sitting for the bar exam is typically a few hundred dollars; a bar loan is intended to cover any expenses related to completing the bar exam.
  • International student loans: Some lenders offer student loans specifically for international students. Since they're private loans, many require you to have a co-signer who's a U.S. citizen or permanent resident.
  • State loans: State loan programs can provide assistance if other loan options, such as federal student loans, are tapped out.
  • Credit union student loans: Credit union student loans often provide competitive terms for borrowers.
  • Student loans without a co-signer: If you've built up a good credit history over the years or are getting federal student loans, you can borrow funds without a co-signer.
  • MBA student loans: Some lenders offer private loans that are specifically for MBA students and may have some features that differ from those of regular graduate student loans.

Student loan pros and cons

When you take out a student loan, you're essentially betting that you'll come out of school not only with more knowledge but also with the capital to repay your loan principal and interest. It's a huge commitment, and parents and students must be fully aware of their obligations to repay their loans.

Benefits of a student loan

For many students, taking out a student loan is the only way higher education becomes attainable. Getting a good education is often a catalyst for a successful and stable career. Paying back a student loan on time after college can be a good way to build a good credit score. Some lenders offer discounts and other financial incentives for on-time payment or if you choose a specific career path, such as being a teacher.

Disadvantages of a student loan

On the flip side of these benefits, taking out a student loan does mean starting postgraduate life with accumulating debt. Student loan debt can get in the way of other financial and lifestyle goals, such as buying a house, purchasing a car or taking a vacation. Penalties for defaulting on student loan repayments can also cost more in the form of fees, interest or, in extreme cases, wage garnishment.

How much do student loans cost?

When you’re borrowing for college, it's important to figure out what your average student loan payment will be after graduation. If you have at least an estimate, you'll have an idea of what to factor in when putting salary expectations on paper during a job interview. Interest and origination fees are what make education debts so costly, and defaulting on a loan or being late on a payment can add to the total amount you owe.

Getting a student loan with a co-signer: Your spouse, relative, guardian or friend can be a co-signer. Only one person can co-sign for a private student loan. For instance, if two parents are willing to be co-signers, only one will be able to do it. Your co-signer is equally responsible for repayment of the full amount of the loan, not just part of it.

Getting a student loan without a co-signer: To get a student loan without a co-signer, first consider federal student loans, since most types don’t require one. If you need additional financing, there are some private lenders that offer loans without co-signers too.

Student loan FAQ

How do I apply for a private student loan?
You can apply for private college loans directly from a lender's website. You should apply after you've made your school decision and once you know how much you need to borrow so you won't have to submit separate student loan applications for schools you're considering.
How do I apply for a federal student loan?
Borrowers must submit a Free Application for Federal Student Aid (FAFSA) form to apply for a federal student loan. The information provided can be sent to one or many schools. Based on your FAFSA results, the college you select will send you a financial aid offer letter containing the amount you're awarded and other pertinent information.
How do I apply for a parent PLUS loan?
To apply for a parent PLUS loan, you need a verified FSA ID, school name, student information, personal information and your employer's information. The entire application process must be completed in a single session, which takes approximately 20 minutes.
Is student loan interest tax-deductible?
Borrowers can take a tax deduction on student loan interest paid. The maximum tax deduction you can take is $2,500 a year.
Can I get a private student loan with bad credit?
If you have bad credit, consider finding a co-signer to guarantee your loan with a private lender.
Can I get a federal student loan with bad credit?
Having a bad credit history does not disqualify you from getting a federal student loan. However, if you require more money for college, you may find it a bit difficult to obtain a private loan.
Are student loans worth it?
Borrowing money is a major decision that should not be taken lightly. There are many factors to consider before taking out a loan, such as the overall cost of the school you choose to attend. Another important factor is the impact of these loans in terms of your and your family’s financial future. Before affixing your name to a student loan agreement, be sure you've tried to find free money for college through scholarships and grants and that you understand all the terms of the loan.
Having a bad credit history does not disqualify you from getting a federal student loan. However, if you require more money for college, you may find it a bit difficult to obtain a private loan.
Who is eligible for student loans?
Undergraduate students and graduate and professional school students who are U.S. citizens or eligible noncitizens and who have financial need are usually eligible for student loans. The awarded funds help students to pay for tuition, room and board and other school-related expenses. Parents can also take out student loans for their children.

Not sure how to choose?

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    Student loan company information

    Sallie Mae

    Sallie Mae is one of the largest and most reputable student loan companies offering both undergraduate and graduate student loans. They have been in business for over 40 years and have helped more than 30 million students and their families save, plan and pay for college.

    Read 1439 Reviews
    PNC Student Loans

    PNC Education Loan Center offers private loan solutions for undergraduate and graduate students with special programs for the Military. The comprehensive loan portal provides financial educational resources as well as college scholarship information.

    Read 11 Reviews
    Citizens Bank Education Refinance Loans

    Citizens Financial Group, Inc. began operations as High Street Bank in 1928 and established Citizens Savings Bank in 1871. After many acquisitions, Citizens Financial Group (CFG) became an independent publicly-traded company in 2015.

    Read Review

    Compare Student Loan Company Reviews

    by Barbara Friedberg Personal Finance Contributing Editor

    Barbara Friedberg, MBA, MS is a former investment portfolio manager with decades of financial experience. Friedberg taught Finance and Investments at several universities. Her work has been featured in U.S. News & World Report, Investopedia, Yahoo!Finance and many more publications.