Find the Best Student Loan Companies

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.

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.

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.