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Student Loans

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More than 43 million students and graduates have student loan debt, and with the high cost of post-secondary education, that number will continue to grow. For students who cannot afford college tuition, loans give them access to higher education, but they are also a significant responsibility and should be treated as such.

Students can choose from federal or private loans, or they may take out both. There are many differences between these lenders, including rates and terms so it's important to research the available lenders before taking out a new loan.

Top 10 Best Rated Student Loans

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Read 9 Reviews

PNC offers private student loans to help close the gap between federal financial aid and the cost of education. It offers a variety of online tools to help students understand and manage their loan repayment obligations.

Read 6 Reviews

Credible Labs, Inc., founded in 1972, is a website dedicated to providing personalized student loan offers from top private lenders. Comparison shoppers can compare loans 24 hours a day for free.

Read 18 Reviews

Educational Funding Company, founded in 1967, is dedicated to serving fitness, martial arts and health-related businesses. They offer innovative solutions and billing, marketing and business advisory services.

Read 118 Reviews

The US Education Department’s mission is to promote student achievement. One way they do this is by helping students through the process of getting a student loan and paying a student loan off.

Read 29 Reviews

The Federal Student Aid programs are one of the largest sources of college financial assistance. It offers direct loans to students in various stages of their education.

Read 169 Reviews

Great Lakes Higher Education Corporation is a non-profit organization dedicated to helping students finance their education and borrow responsibly. It works with the Department of Education as well as private lenders.

Read 1320 Reviews

Sallie Mae is one of the biggest and best known private student loan companies. It has offered a variety of loans to students as well as parental loans for over 40 years and has serviced over 30 million Americans.

Read 114 Reviews

Wells Fargo is one of the largest banks in the United States. It backs a variety of federal student loans as well as offering private loans to students who need additional financial aid beyond the maximum federal allowance.

Read 135 Reviews

Citi Student Loans provides materials and a step-by-step process of how to pay off student loans. It also offers multiple repayment plan options and methods of payment options to ensure that it is convenient for each customer.

Read 43 Reviews

For over 20 years, Student Assistance Corp. has been helping the nation’s leading student loan guarantors not pay millions in loan defaults. They are a national leader in providing default prevention services for student loans.

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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.

What features matter most?

Money-saving benefits

Frequently, lenders offer a variety of discounts and other financial incentives.

  • Cash back: Many lenders offer cash back on the loan for on-time payments. Other firms offer interest rate discounts.
  • Interest: Interest rates vary from lender to lender and within a specific company. Lower interest-rate loans can save a dramatic amount of money over time. Lenders offer variable interest rates, which change throughout the course of the loan, and fixed rate loans. Make certain to understand the cap or maximum interest rate on a variable interest rate loan. Before accepting the loan, find out the future payment amount for the loan repayment.
  • Amount: The total amount available for borrowing varies among private student lenders. Consider borrowing as small amount as possible to keep future loan repayments lower.

Waiting period

The waiting period before the consumer receives payments varies. Understand when the loan funds will be released.

  • Application process: Before selecting a lender, review their application process. In most circumstances, a simpler application process is preferable.
  • Requirements: Buyers should investigate the loan requirements. Certain loans require borrowers to have a specific credit score, and others look at your total current debt as well as prior repayment patterns of the borrower. Be aware of loan cosigner requirements as well.
  • Fund transfer: Understand how you’ll receive the loan proceeds. Find out if the loan is distributed over time or in a lump sum.

Reseller of loans

It’s common practice for the initial lender to sell your loan to another firm. The borrower should investigate the lender’s loan reselling policy.

  • Change of terms: If the loan will be resold, make sure that the terms of loan will remain intact.
  • Markets: To avoid confusion, choose a lender that sells to only one secondary market. That way, the private student loans are easier to manage and remain with one company.
  • New owners: Check the reviews of the company that may buy your student loan. The borrower should verify that the new company is reputable and easy to work with.

Servicers

A loan servicer is a company that manages loans for a lender. Their duties include processing the payments, helping borrowers adjust repayment plans and assisting with repayment problems.

  • Contact: Borrowers can ask the lender who the loan servicer is. It’s important for the borrower to update the servicer with change of address, income and other important loan related details.
  • Payment method: Borrowers should find out the methods of payment accepted by the loan servicer.

Capitalization

This term describes the addition of interest to the principal loan amount borrowed from a loan. As soon as the private student loan funds are dispersed, the interest accrual begins. Ultimately, the borrower will pay back both the principal amount borrowed and the interest that continues to be capitalized or added on to the loan.

  • Timeframe: Interest on the loan, calculated as a percent of the current principal balance begins when the money is sent to you or your school. The loan interest grows or accrues daily.
  • Payment amounts: Find out the amount of the monthly loan payment, how it is calculated and ways to negotiate the payment, if necessary.

Repayment options

When taking out a loan, it's important to understand the terms of the loan including types of repayment plans offered by the lender. Choosing a lender with educational resources that helps the borrower manage their money is also important.

  • Graduated repayment: Graduated repayment plans help borrowers pay less when they are first starting out with payment increases as their income goes up over time.
  • Consolidation: Consolidating student loans can be helpful. Loan companies may offer various repayment solutions including bundling all the loans in order to make one monthly loan payment. The borrower should understand the terms and additional fees, if any, for the opportunity to consolidate their student loans.

What are different types of student loans?

Federal loans

Federal student loans are funded by the government. They may be included in a financial aid package. Federal loans include direct subsidized loans and direct unsubsidized loans, direct PLUS loans (for graduate students and their parents) and Federal Perkins loans. In general, interest rates and fees are lower for Federal student loans than for private student loans.

Federal direct subsidized loans

These loans are available to undergraduate students with a demonstrated financial need. The government pays interest on a direct subsidized 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 leaving school and during a period of deferment.

Federal direct unsubsidized loans

These loans are available to both undergraduate and graduate students without demonstrated financial need.

Federal direct PLUS loan

A loan available to both graduate students and their parents. The borrower is responsible for the interest payments.

Federal Perkins loan

Also called the Perkins loan, these are low-interest federal student loans for both undergraduate and graduate students with extreme financial need.

Private loans

Private loans are nonfederal loans made by a bank, credit union, state agency, school or other type of lender. The terms, amounts and benefits vary by lender.

Who are student loans for?

Undergraduate students with financial need

Undergraduates without an income or without the means to pay for college are eligible to apply for student loans to assist with the costs of attending college, university or post-high school educational institutions.

Graduate students with financial need

Graduate and professional school students without an income or without the means to pay for college are eligible to apply for student loans to help pay for tuition, fees and expenses.

Parents of students

The parents of graduate and undergraduate students may benefit from student loans to help pay for their children’s education. Loans are also available to parents of students attending private K through 12 educational institutions.

Students who don't qualify for scholarships

Many students are able to get free money in the form of scholarships to help pay for college tuition. It's a smart idea to explore this option before applying for student loans. Additionally, scholarships may be an important supplement to the student loan proceeds.

What does the expert have to say?

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.

Great Lakes Higher Education Corp.

Great Lakes is a non-profit organization that helps students make college a reality. The company partners with the U.S. Department of Education and private lenders to facilitate successful student loan repayment.

Wells Fargo Student Loans

Wells Fargo has been in the student loan business for over 20 years. They offer private loans to students to help cover the costs of attending undergraduate and graduate school.

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.

Suntrust Student Loans

The SunTrust Custom Choice Loan is a private loan solution for students whose federal loans, scholarships and grants aren’t enough.

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.

  • Services: Citizens offers private undergraduate and graduate student loans as well as student loans for parents. The company also arranges student loan refinancing, student banking and provides an educational portal.
  • Fees and interest rates: Citizen charges no application, origination or disbursement fees. The company has fixed or variable interest rate loans and a new multi-year borrowing option to streamline the loan process.
  • Discounts: The available discounts can lower the borrowers interest rate by up to 0.50 percent.
  • Student loan process resources: This section of Citizens’ website answers important educational financing questions such as how to get financial aid, loans, grants and scholarships. Additional guidance includes basic budgeting advice and details about loans and repayment.
  • Best for: Students looking for college funding information and access to private lending solutions.

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11 – 16 Best Rated Student Loans

Read 49 Reviews

Direct Loan Servicing uses the William D. Ford Federal Direct Loan program. Their website is stored with information to ensure that students and parents are informed about all aspects of Direct Loans.

Read 367 Reviews

ACS Education Services offers student loan repayment services and customer care services to consumers. ACS helps process payments, answer questions, apply deferments for qualifying customers and numerous other services.

Read 558 Reviews

Navient provides services to thousands of college clients; they are one of a few select companies chosen to service students and parents with federal loans for the U.S. Department of Education.

Read 13 Reviews

HESC is New York State's student financial aid agency. They have helped thousands of students achieve their college dreams by providing over $980 million in grants, scholarships and federal student loan guarantees.

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SunTrust Bank offers private student loans to both undergraduate and graduate students. Its website includes information about scholarships as well as about money management, planning advice and loan repayment options.

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Citizens Bank Education Refinance Loan helps customers consolidate their private and federal student loans. Borrowers do not incur penalties for paying more than the minimum monthly payment or for paying off their loan early.